Calculating Cost per Conversion

Objective

We need to understand how much each conversion costs because it's very important in relation to how much profit we make.

For example:

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If you are selling a $30 product and each conversion costs us $5, that's very good. You're going to be left with a lot of profit, hoping that the Amazon fees and cost of goods are not too high.
But if that cost of each conversion is really high, so let's say that you're selling a $30 product and it's a $15 cost of each conversion, that could be a problem because you're going to spend too much money trying to make a conversion and lose all of the profit.

If you break down the cost of conversion, you can figure out that there are two issues as to why that Cost per Conversion is too high.

Create a new sheet where you will track:

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Cost per Session - go to the Analytics sheet where you will copy the Cost Per Session. In this example, the average for this given week is $1.07.
Unit Session % - go to the Analytics sheet where you will copy the Unit Session %.

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Cost per Conversion - Formula: =Cost per Session * # of sessions required to make a conversion
1. # of sessions required to make a conversion - Formula: =1/Unit Session %
- In this example, it’s =1/43.40% which gives us 2.3
- In this example, it’s =$1.07*2.3 which gives us $2.47