Pay-Per-Click
Profitability Calculator
This online calculator will provide valuable information about whether to
stop or continue a particular pay-per-click campaign.
Based on information about your ad costs and the response to your
ad, it is possible to find the likelihood that your campaign will continue
to make money or continue to lose money.
Keep in mind
that these estimates assume that everything stays the same.
They are estimates about the effectiveness of a particular ad for a
particular product, at a particular price, sold with a particular sales
page. These estimates also
assume that your competition stays the same.
Since Internet conditions are constantly changing, you should
continue to monitor successful campaigns to make sure they don’t stop
selling well, and you should retry marginally unprofitable campaigns to
see if conditions have changed.
Input Fields
Selling price of product: Enter the retail price, paid by the
consumer.
Commission percentage:
Enter the percent of the selling price paid to you.
For instance, Clickbank commissions are typically 25-75% but can be
as low as 1%.
Discount:
Any additional charge deducted by the payment service.
For instance, Clickbank charges 10%.
Leave blank if this does not apply.
Payment per click:
The amount you pay every time someone clicks through on your ad.
The minimum charge per click for Google Ads is five cents (0.05).
Number of click-throughs:
The number of times someone has clicked on your ad.
Number of sales:
The number of times someone has purchased the product through your ad.
Output Fields
Payment per sale: The commission you receive when someone purchases a
product, minus any payment service discount.
You will make a profit …: If you get a sale, on average, with
this number of click-throughs, you will break even.
You will make a profit if you average more sales.
Total net profit (loss): The total profit earned by this campaign.
This is your payment per sale times the number of sales, minus what
you paid for click-throughs. Losses
are shown with a minus sign.
Net profit (loss) per
click-through: This is the average
amount you earn every time someone clicks on your ad.
Losses are shown in parentheses.
Probability that a potentially profitable campaign will have no sales:
You will only see this displayed if you have not yet had any sales.
This will help you to determine how long to maintain a campaign
that has not resulted in any sales. The
percentage is the likelihood that a potentially profitable campaign could
have gotten the number of click-throughs that you reported, without anyone
buying yet. As an example,
suppose you receive a $25 commission for each sale and pay five cents per
click. You have gotten 200
click-throughs with no sales. The
calculator will tell you that 67%, or two out of three times, a
potentially profitable campaign can have a run of 200 clicks with no
sales. After 400 clicks, the
percentage falls to 44.9%, and after 2000 clicks it is only 1.8%.
You would begin to consider dropping this campaign after about 400
clicks with no sales, and would definitely drop it before 2000 clicks.
Narrative Interpretation
If your have already made sales:
You will see either:
"Your campaign is
showing a profit." or
"Your campaign has
not showing a profit."
You will then see an
indication of whether the trend is likely to continue, or if there is a
possibility that the tide could turn.
You’ll see one of three statements:
1) No trend yet: This
means that there is not enough data yet to determine if your results,
whether showing a profit or not showing a profit, are stable.
2) Mild
trend (likelihood of reverse less than 25%): The trend is starting to
stabilize. If you are showing
a profit, there is less than a 25% chance that you have a campaign that
will lose money in the long run. If
your campaign has not shown a profit, there is less than a 25% chance that
you will eventually show a profit.
3)
Strong trend (likelihood of reverse less than 5%): The trend, either
showing a profit or not showing a profit, is stable and can be expected to
continue.
If
you have not yet made sales:
You will see this statement
"Given
that you have made no sales after n click-throughs... "
(n
will be filled in with the number of click-throughs that you entered):
This will be followed by one of four statements:
1)
"... it is
too early to tell whether this will be a profitable campaign."
This means that a profitable campaign could easily generate this number of
click-throughs with no sales.
2)
"... this may not be a profitable campaign (<50%)."
This means that, if your campaign is potentially profitable, at
least half the time you would have had a sale by now.
You should start thinking about whether to keep, modify, or end the
campaign.
3)
"... this will probably not be a profitable campaign
(<25%)." This
means that at least three out of four potentially profitable campaigns
would have had a sale by now. Seriously
think about modifying or ending the campaign.
4)
"... this
is very unlikely to be a profitable campaign
(<5%)." You
can be almost sure that this campaign will not turn a profit, and you
should end it.
You can use this calculator to analyze a campaign since its inception.
You can also use it to analyze the last few days of a campaign, if
you suspect that a previously profitable campaign is no longer working.
