Economics of a landing

Net income – net income. In some industries it may be per order. For those who calculate LTV, net income may be calculated just per client.

CR1 – Conversion of landing. How effectively your landing converts visitors into potential clients.

CR2 – Conversion of sales department. How effectively your sales department converts leads into orders. If it is an internet shop, you can calculate CR2 for your shopping cart.

% – Percentage of net income that you are ready to pay per acquisition (for attracting a new customer).

Variance – a measure of dispersion in price per click. The cost per click varies. For new companies let it be 1.5.

How much are you ready to  pay per click?

CPC = Net income * % * CR1 * CR2 * Variance

Example:

$5000 * 20 % * 5 % * 10 % * 1.5 = $7.5

How much are you ready to pay per lead?

CPC = Desirable CPL * CR1* Variance

$100 * 5 % * 1.5 = $7.5

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