Dec 28, 2016
An Easy Formula for Setting PPC Bid Prices
Wondering how much you should pay for each click when using Google AdWords or another PPC platform? Here’s An Easy Formula for Setting PPC Bid Prices.
- First, look at your add performance to see how many clicks you’re getting.
- Then, figure out what your conversion rate for those clicks is (how many of them are turning to customers?)
- Finally, figure out what you’re profit margin is, on average, for those conversions.
By dividing that profit margin over your conversion rate, you can find your break-even point for PPC. For example, if you’re getting 100 visitors per day, averaging 10 sales, and earning $10 per sale, then you’re actually making a gross profit of $1 per click. Bidding anything above that is going to result in a loss unless you can convert more visitors into buyers.
This isn’t a foolproof system for establishing PPC bids, of course, but it’s a good starting point to make sure you don’t lose money on your online advertising.