Breaking even on the front end & ROI

8 replies
Math doesn't add up here for some reason.

Let's say you have an info product that costs you $50 PPC to convert a $50 sale.

So now you spend $1k a day on PPC ads and you got yourself 20 customers.

At the end of the month you have spent $30k on PPC and have 600 customers to show for it.

You broke even.

Now you email those "buyers" another $50 offer.

Let's be generous here...

50% open rate, 10% CTR on your email to them.

Let's say you have an amazing offer and it converts at 10%

So you sold 6 customers a $50 product.

Congrats!.. you just made a profit of $300.



So you spent $30k in PPC ads to make a profit of $300 ?



Obviously missing something here but who in their right mind would think an ROI like this is even remotely worth it?

Yet all these big guru digital IM'ers keep saying all you need to do is break even on the front end.


Where am I wrong in the math here?



Thanks
#breaking #end #front #roi
  • Profile picture of the author GordonJ
    Originally Posted by mrdeflation View Post

    Math doesn't add up here for some reason.

    Let's say you have an info product that costs you $50 PPC to convert a $50 sale.

    So now you spend $1k a day on PPC ads and you got yourself 20 customers.

    At the end of the month you have spent $30k on PPC and have 600 customers to show for it.

    You broke even.

    Now you email those "buyers" another $50 offer.

    Let's be generous here...

    50% open rate, 10% CTR on your email to them.

    Let's say you have an amazing offer and it converts at 10%

    So you sold 6 customers a $50 product.

    Congrats!.. you just made a profit of $300.



    So you spent $30k in PPC ads to make a profit of $300 ?



    Obviously missing something here but who in their right mind would think an ROI like this is even remotely worth it?

    Yet all these big guru digital IM'ers keep saying all you need to do is break even on the front end. WHO?


    Where am I wrong in the math here?



    Thanks
    Your math is missing the LIFETIME VALUE of your customer. To have a list of 600 buyers, to which you could make several offers a year to, you no longer have your 1000 to get a 1000 model.

    So when you hear about breaking even on the front end, you have to take a look at the cost of acquiring a customer, in your math mode; you acquired a customer, then sent them ONE additional offer.

    You can bet whatever "gurus" you're talkig about have upsells, downsells, cross sells, even survey's and affiliate offers.

    They don't have to pay that cost and over time, whatever their funnel looks like, they could recoup the acquisition many times over and be well into profit.

    Many marketers don't like this model and choose to make a profit on the front end, and some have a big ticket item too. Your math is speculative and youi make a lot of assumptions with the numbers and response rates...when the reality of it might be more of a 30 to70% ROI when Lifetime Value (LTV) is added in.

    It is a choice to have a loss leader, or a break even or even a profit on the front end, there are no rules.

    But you have to know your math going in, which includes projections for LTV
    to really get to your Net Profit ROI.

    GordonJ
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  • Profile picture of the author InfiniteAI
    You're not considering the upsells .The gentleman above is on point. You should consider the LTV of each prospect.

    If you're breaking even , consider that now you have a list of 1000 buyer email addresses for literally $0 cost. Having a buyers list is a ton more valuable then just having freebie opt-ins. You know that person spent money, so you know he/she will probably do it again if you sell him a good offer in a good way.

    I coach people on list building and I kid you not, I've seen some of my students make $4k to $5K month after month with just 300- 400 buyers list. Even though the offer being promoted was high ticket, but that's what I teach. Polarize your list with high ticket offers .

    I don't believe in huge low quality list. Quality over quantity has always worked better for me. Also, I never promote garbage offers. Only products that truly provide value and have made people money.

    ^
    AI
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    Hands down the simplest way to making $100 a day in 2 weeks. I was a newbie and this changed my life.
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  • Profile picture of the author yukon
    Banned
    Originally Posted by mrdeflation View Post

    Math doesn't add up here for some reason.

    Let's say you have an info product that costs you $50 PPC to convert a $50 sale.

    So now you spend $1k a day on PPC ads and you got yourself 20 customers.

    Impossible.

    You're not getting a 100% conversion rate.
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    Hi
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  • Profile picture of the author Steve B
    The difficult thing about doing the math when you are a beginner in marketing is the fact that you have to make some assumptions about the numbers because you don't have any history to know what it costs to get a subscriber and you don't know what your conversion rate is going to be.

    So you make some assumptions (which could be way off) in order to "guesstimate" what your ROI is going to be. After you have some history you will have a better handle on the real numbers and you will be able to estimate with some certainty what you can spend on acquiring new customers and you will have a better idea of what your conversion rate is.

    In the beginning, IMO, it is always best to make your assumptions very cautiously and very conservative so that any upside is a pleasant surprise. Don't "bet the farm" on your first campaign.

    Start your marketing campaigns on a small scale being conservative in your assumptions, tracking and testing and tweaking so you can optimize your campaigns. Only after you show a consistent profit on a campaign should you ramp things up on a larger scale.

    The best to you in your marketing campaigns.

    Steve
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    Steve Browne, online business strategies, tips, guidance, and resources
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  • Profile picture of the author jayceexzero
    Calculating your profit without looking for every possible angle isn't going to get you anywhere. If I were you, I wouldn't spend too much capital, instead I'll spend small amount to earn double amount of that money. Even investing $1 to earn $3 is better in my own opinion.
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  • Profile picture of the author jords16
    Originally Posted by mrdeflation View Post

    Math doesn't add up here for some reason.

    Let's say you have an info product that costs you $50 PPC to convert a $50 sale.

    So now you spend $1k a day on PPC ads and you got yourself 20 customers.

    At the end of the month you have spent $30k on PPC and have 600 customers to show for it.

    You broke even.

    Now you email those "buyers" another $50 offer.

    Let's be generous here...

    50% open rate, 10% CTR on your email to them.

    Let's say you have an amazing offer and it converts at 10%

    So you sold 6 customers a $50 product.

    Congrats!.. you just made a profit of $300.



    So you spent $30k in PPC ads to make a profit of $300 ?



    Obviously missing something here but who in their right mind would think an ROI like this is even remotely worth it?

    Yet all these big guru digital IM'ers keep saying all you need to do is break even on the front end.


    Where am I wrong in the math here?



    Thanks
    How you can get 20 customer for $1 a day.
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    [Drive REAL TRAFFIC to your website with SOLO ADS] Register Now! For FREE!
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    • Profile picture of the author mrdeflation
      $1k does not equal $1
      Signature

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  • Profile picture of the author Oziboomer
    Originally Posted by mrdeflation View Post

    Yet all these big guru digital IM'ers keep saying all you need to do is break even on the front end.


    Where am I wrong in the math here?
    The same reason dollar shave club sold for $1B

    They only sold $1 razors right?

    You can read about it here--->
    https://www.bloomberg.com/news/artic...lar-shave-club

    They really were selling subscriptions at a higher level and also building a list of buyers.

    Those things might be kinda valuable you know.

    That is the big back end.

    Not everyone may build such a business but it is worth understanding the structure and the way things work.

    best regards,

    Ozi
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