How do I include my advertising cost per order in the selling price?

The mistake many sellers make

The seller prices from cost, shipping and fees, then launches a campaign and treats it as a separate expense. At month end sales are up and the profit has vanished. Every order that came through an ad carried a cost the price never included.

In the example above, sell at 79.27 while paying 20 in ads per order, and your 11.89 profit before ads becomes a loss of 8.11 after them.

Where the ad cost per order comes from

Divide what you spent on the campaign by the orders it brought. If you have impressions, clicks and conversions, the Campaign performance calculator gives you the cost per conversion directly. Use an average over a sensible period, not one unusually good or bad day.

The calculation

1. In the Selling-price calculator, enter cost, shipping, percentage fees and margin as usual.
2. Add the average ad cost per order to fixed fees, along with any other fixed fee.
3. Read the price: that is what an order coming from ads needs to hit your margin.

When the price becomes unrealistic

If the price comes out above what your customers will pay, the calculator is telling you something useful: this campaign at this cost does not suit this product. Your options are to improve the campaign so each order costs less, advertise higher-margin products that can carry the cost, or treat the ad as an investment in a customer who will come back and buy without one. That last call needs your repeat-purchase numbers, which the tool does not know.

Another way to look at it

Instead of asking what price covers the ads, you can ask what return on ad spend you need at a given price. The ROAS calculator answers that by working out the return at which a campaign breaks even. The two tools fit together: one sets the price, the other watches the campaign.