Conversion Calculation.

Keep working with http://marketplace.clickbank.net/ we can determine which goods is in popular demand on the market, which commission of sales we can get and a lot of other things which are available Online.
Let’s start from the determination of what ‘conversion’ is.

Conversion is an equation which determines the number of users, which became the subscribers, buyers or members of an affiliate program which you advertise.

Saying in simple words, CONVERSION is a proportion of quantity of people which have visited your e-shop, to quantity of people which made required action, viz, buy of goods, registration on the web-site, click and advertising review.

Conversion is very important parameter of determination of the budget of your business. You have to know the volume of expenses for advertisement, how these expenses are paid for your business.

For example, formula of calculation of users’ conversion, which had subscribed or had bought the product, could be as follows:

Number of users + number of buyers = rate exchange

In other words, if your web-site and your advertisement has 10 000 users and 500 subscriptions for news (or result clicks, that is clicks, which resulted in purchases), then the conversion will comprise 1 to 20.

If the owner of the affiliate program offers you conversion 1:20, it means that one of twenty users is going to buy (registration, or any other action, which you’ll be paid for).
You have placed an advertising on Google, your advertising budget comprises 50$ per day, and you pay 0,10$ per click. It means that you are to have 500 users, in order your expenses have to be repaid. Profit = expenses.

Let’s do approximate calculation of your profit of ONE affiliate program. This is not a hard task:
Let’s guess:
- We choose goods on http://marketplace.clickbank.net/
- Offered conversion is 1:30
- Profit of one sale is going to comprise, for example, 30$.
- 1 click on you advertising will cost you 0,20$ (it depends of key-word cost).
Let’s define how much we have to pay to Google in order to complete ONE sell:
Pay per click * quantity of clicks = expenses for advertising

0.20$ * 30 = 6$ - is our payment for advertising by Google at ONE sale.
Let’s estimate our profit!

Profit of a sale – expenses for advertisement = profit
30$ - 6$ = 24$ - thus, profit of one sale with our affiliate program will comprise USD 24.
Let’s imagine that we pay advertisement at the arte of 60$, it’s 300 users.
If the conversion is correct, we will make 10 sales and get:
300$ - 60$ = 240$ Profit of ONE goods per day with budget of 60$!
The most important thing for us is correct calculation of expenses for advertising. Which maximum cost should we set per one click on your advertisement, in order to get profit at existed conversion?

You are just to start in order to succeed!
Let’s regard the process of advertising agency working in order to make further calculations, which help you to define the importance of each user of your web-site.

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