How to choose the right CPC for a new campaign

Choosing the right CPC (cost per click) for a new campaign is essential to test efficiently and keep profitability in check. The calculation is simple once you know three things: (1) how much you earn per conversion (CPA payout), (2) what percentage of visitors to your landing page convert (conversion rate), and (3) what profit margin you want to keep for yourself.

The formula:
Max CPC = CPA × Conversion Rate × (1 − Desired Margin)

Step 1 – Define your CPA payout:
This is the amount you get paid per lead or sale. For example, let’s assume you earn $40 per conversion.

Step 2 – Estimate your conversion rate:
This is the percentage of people who land on your page and complete the desired action. If 5 out of 100 visitors convert, that’s a 5% conversion rate.

Step 3 – Apply the formula:
Revenue per click = $40 × 5% = $2.00 value per click.
If you want to keep 50% as profit, your Max CPC = $2.00 × 0.50 = $1.00.

Additional examples:
• CPA = $25, CR = 8%, Margin = 40% → Value per click = $2.00 → Max CPC = $1.20.
• CPA = $60, CR = 12%, Margin = 50% → Value per click = $7.20 → Max CPC = $3.60.
• CPA = $100, CR = 3%, Margin = 30% → Value per click = $3.00 → Max CPC = $2.10.

Tips:
• Start slightly below your calculated Max CPC to test safely.
• Use conservative CR estimates if you don’t yet have real data.
• Adjust CPC upwards or downwards once you see actual conversion results.
• The higher your conversion rate, the more you can afford to bid per click.

Rule of thumb: If you want to keep half of your revenue as profit, your starting CPC should be about half of (CPA × Conversion Rate). Begin with a cautious number, validate performance, and scale from there.