Pay Per Clicks – What is Your Customer’s Value?
Once you get traffic on your website, how much are they worth to you? What is their value?
Cost per click = 10
Total number of customers to your website = 200
Total cost of Google AdWords campaign = 10 * 200 = Rs. 2000
Supposing cost Price of the product you sell = Rs. 2000/item, and the profit after tax and costs is Rs. 1000/item.
If just one out of the 200 people who visit your website converts (Leads, Sign-up, download, Sales etc) on your website, you make a sale of 2000, with a profit of 1000.
If two out of the 200 people who visit your website converts (Leads, Sign-up, download, Sales etc) on your website, you make a sale of 4000, with a profit of 2000.
If three out of the 200 people who visit your website converts (Leads, Sign-up, download, Sales etc) on your website, you make a sale of 6000, with a profit of 3000.
Your customer’s value will decide how much you can spend each month on your Pay Per Click campaign. You can break even if just two of those 200 potential customers converts and buys your product. Anything more than that is a profit.
This will also help you decide how much you can pay per click.
Supposing you have a conversion ration of 2% for a product which gives you a profit of Rs. 1000 your Maximum Pay Per Click will be:
Maximum Pay Per Click = Profit * Conversion Ratio /100
= 1000 * 2 /100 = Rs. 20
Therefore for a conversion ratio of 2% with a profit of Rs. 1000, your maximum pay per click amount is Rs. 20/-. If you pay anything below 20 per click you will make a profit.
Calculate your customer value, it is essential to your campaign. For more information, visit the blog at first10.
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