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Can you afford Facebook ads? Let’s do the math!

February 20, 2020


Can you afford Facebook ads Let’s figure out how much you can afford to pay for a lead Then how many of those typically turn into clients? if you don’t already know these numbers make your best guess until you can prove them as Every business is different and will never have the same sales cycle or cost associated with it. Hi I’m Sally Hendrick your Nashville Tennessee gal who knows Facebook ads and sales funnels up down Forwards and backwards. I’m here to help you understand how to make money online Let’s start with an example that will show you how to calculate these figures In this chart we are doing simple math, but it can get confusing if you aren’t familiar with the terms let’s assume you have spent two thousand dollars in facebook ads and got 200 new leads from them into your sales funnel That’s a cost per lead of ten dollars Make that $2,000 ads fin divided by the two hundred leads to get the cost per lead or Cpl as we like to call it Then let’s assume you get five new clients from these two hundred leads That is a conversion rate of two and a half percent meaning that five out of 200 people Actually purchased something from you Next you have to figure out what the lifetime value of a client is for your business Now this can get more complicated because sometimes our clients will buy multiple things from us over time Others may only buy from us once and prices of our offers can vary. So let’s take a bird’s eye view If you have the data to evaluate This and has been making consistent sales in your business then take your gross income divided by the number of clients you have That could represent the lifetime value of a client if you’re just starting out though This is harder to calculate for the long term. So maybe you just want to focus on your current offer let’s assume that has a price tag of $3,000 per client Go back to the math if you can expect $3,000 in income per client on average and you get five new clients. That’s a gross income of $15,000 So how does this relate to knowing if you can afford? Facebook Ads you Must convert this lifetime value per client into the lifetime value per leave if the lifetime value per client of $3,000 and multiply by your conversion rate of two and a half percent that gets you $75, that’s the lifetime value of a lead into your business Now you can compare your leave value to your lead cost if your lead is worth $75 to your business But you only spent $10 to get it You have sixty five dollars leftover per lead to run your business pay yourself and make a profit all right, so let’s take $65, that’s the leftover amount. You have to run your business Times the two hundred leads that you got to get thirteen thousand dollars left over after your ad spend is Thirteen thousand dollars enough to cover your operating costs until more leads come in Let’s just say that you bring in 200 new leads every quarter will the $13,000 remaining cover your operating cost for the entire quarter That is the real question What is the maximum that you can pay for a lead if you need help figuring out these pesky numbers? I love math So just reach out to me by visiting social media traffic school comm and click on the chat bubble in the bottom right corner Have a great day Hi, I’m Sally Hendrick your Nashville Tennessee gal who knows Facebook ads and sales funnels up down forwards and backwards I’m here to take hmm Hi, I’m Sally Hendrick You’re Nashville Tennessee gal who knows Facebook ads and sales funnels up down forwards and backwards. I’m here Why do I can’t do this?

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