Profit = CLICKS x (Conversion Rate x Price - CPC)

I haven't started selling my product online yet, but was wondering what some of your "conversion rates" were for online sales. I was hoping for at least 1% to make profit over the cost of advertising.

My product goes for about 20 bucks and the Adwords Traffic Estimator tells me that I can get about 8,000 clicks/day at a CPC of 10 cents.

8000 clicks/day x (1% x $20.00 - $.10) = $800.00 day... which would be swell.

 

Conversion rate probably depends on your market/niche. It also very much depends on your website and copywriting ability and several other hard to quantify factors.

BTW. I think the formula in your title should be,

Profit = CLICKS x ( ( Conversion Rate x Price ) - CPC)

 

If you're selling products that you have to pay for first, you should be using the marginal profit per sale, rather than price (i.e. price - cost of product)

 

I don't have to pay for my product, but you're right.

In a perfect world, I'd be able to graph this to find a maximum profit.

Obviously, there is a a relationship between CPC & Clicks, as well as Price & Conversion Rate. As CPC goes up, so do clicks, but it is not linear. And as Price goes up, Conversion Rate goes down. Fortunately, as mentioned, there are many things you can do boost your conversion rate besides lowering price.

Unfortunately, I don't think many advertisers, especially new ones, have a handle on maximizing profits, which can drive up the bid price on clicks for all of us.