Work out your cost per click, click-through rate and CPM from your ad spend, plan a budget from a click target, and find the most you can pay per click before a first order loses money.
CPC, or cost per click, is what you pay for each click on an ad: your ad spend divided by your clicks. A low CPC is not always a good one, because it ignores what happens after the click. The most you can pay per click and still break even is your break-even CPC.
The formulas
CPC = Ad spend / Clicks; Break-even CPC = Average order value x Conversion rate x Contribution margin before ad spend; Profit per click = Break-even CPC - CPC
The first formula measures what you paid. The second finds the most you can pay. The third compares the two.
Worked examples
Each example follows the same steps as the calculator above. The amounts work in any currency.
Example 1
A campaign spent 1,260.00 and got 1,800 clicks from 94,000 impressions.
Inputs
Working
Cost per click
0.70
Each click cost 0.70 and every 1,000 impressions cost 13.40. A 1.9% click-through rate means about 19 of every 1,000 impressions became a click.
Example 2
A store's average order is 60.00. 2.5% of ad clicks turn into an order, and each order leaves 40% of its value after product cost, shipping, payment fees and refunds, before any ad spend.
Inputs
Working
Break-even CPC
0.60 per click
A click that costs more than 0.60 loses money on a first order. Holding a 3x ROAS would take clicks at 0.50 or less.
Example 3
A store with an 85.00 average order, a 1.8% conversion rate and 35% left after product cost, shipping, payment fees and refunds spent 1,260.00 on 1,800 clicks.
Inputs
Working
Profit per click
Loss of 0.16 per click
Each click costs 0.16 more than it earns on a first order, 296.10 across the 1,800 clicks. Bringing CPC down to about 0.54, or lifting the conversion rate to 2.35% at the same CPC, would break even.
The guide
Three numbers describe what a campaign costs before anyone buys. They are linked, so a change in one explains a change in another.
Ad spend divided by clicks. It is the price of getting one visitor to your store from the ad.
Clicks divided by impressions. It shows how often people who see the ad choose to click it.
Ad spend divided by impressions, times 1,000. It is the price of being seen, whether or not anyone clicks.
Put together, CPC = CPM / (CTR x 1,000), with CTR written as a fraction, so 2% is 0.02. A lower CPC comes from cheaper impressions, from ads that get clicked more, or from both.
CPC only measures the price of a visit. Two campaigns with the same CPC can earn very different amounts, because visitors convert at different rates and buy different baskets. The break-even CPC above puts a value on a click, so you can judge the price against it. The contribution margin calculator shows how to work out the margin that goes into it.
Divide CPC by your conversion rate to get the cost of an order, your CPA. Divide the revenue a click brings in by CPC and you get ROAS. All three describe the same spend: CPC prices the click, CPA prices the order, and ROAS compares the revenue with the cost. The break-even ROAS calculator covers the threshold in more detail.
The answer is only as good as the figures behind it. These are the ones to check first.
Ad platforms count clicks in different ways, for example all clicks versus link clicks. Use one definition for clicks and impressions, and the same one every time.
Orders divided by ad clicks from the same period. A store analytics report counts sessions, and sessions and ad clicks are rarely equal, so use the platform's click count with the orders those ads brought in.
The share of each order left after product cost, shipping, payment fees and refunds. Leave ad spend out, because the break-even CPC is the ad spend that margin can carry.
Revenue divided by orders for the same traffic. If the ads sell a single product, use that product's order value rather than the whole store's.
It counts the first order only. If customers come back and buy again, a click is worth more than this and you can afford more. It also assumes your conversion rate and margin hold across all the traffic you buy, and new audiences often convert differently. Treat it as a ceiling for the average click, not as a bid to set. The LTV calculator covers repeat purchases.
In MerchantFlow
MerchantFlow brings in your ad spend from Meta, Google Ads, TikTok and Snapchat and shows ROAS for each platform alongside a blended MER worked out from the orders in your store. The same dashboard takes COGS, payment fees, shipping and refunds off your revenue, so you can see whether your ad spend is turning into profit and not just revenue.
See the real-time P&LCommon Questions
Divide your ad spend by the number of clicks the ads got. If you spent 1,260 and got 1,800 clicks, your CPC is 0.70. Use spend and clicks from the same period and the same ads.
There is no CPC that is good for every store. It depends on your category, the platform, the audience, the season and how many advertisers want the same clicks. The test that matters is your own: a CPC is good when it is below the break-even CPC for your order value, conversion rate and margin.
Multiply your average order value by your conversion rate to get the revenue a click brings in, then multiply by your contribution margin before ad spend. The result is the most you can pay per click before a first order loses money.
CPC is the cost of a click, CPM is the cost of 1,000 impressions and CTR is the share of impressions that become clicks. They are linked: CPC equals CPM divided by the clicks you get per 1,000 impressions, so a lower CPM or a higher CTR lowers your CPC.
No. Cheap clicks from visitors who rarely buy can cost more per order than expensive clicks from visitors who do. Compare CPC with the value of a click, and look at cost per order and ROAS as well.
Divide the budget by your CPC. To work the other way, multiply the clicks you want by your CPC to get the budget they need. The planner in the calculator above does both.
CPA is CPC divided by your conversion rate. At a given CPC, doubling your conversion rate halves the cost of each order, which is why improving the page can lower CPA as much as a cheaper click can.
No. A max CPC bid, such as the setting in Google Ads manual bidding, is the most you tell the platform it may charge for a click, and what you actually pay per click can be lower. Break-even CPC is the most a click can cost on average before a first order loses money. It can help you choose a bid, but it is not one.
More Tools
Work out ROAS from ad revenue and spend, or the most you can spend at a target ROAS
The return on ad spend at which a campaign stops losing money
Turn a revenue target and a ROAS goal into a monthly ad budget across channels
Blended ROAS from total revenue and total ad spend across every channel
Contribution margin per unit and as a ratio, with break-even units and break-even ROAS
What each order or customer costs you to win