Confused about cost per purchase

wwa2b

wwa2b

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I'm watching this YT video about FB ads and the guy says he's very happy with a cost per purchase of $35, even though he's selling $50 polos.
I find it strange since he cannot be making any money, and is more likely losing $ on each sale.
What am I missing? Is he counting on customer lifetime value, betting that the profit will come from future purchases?
 
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ya bro he prob thinking about lifetime value, first sale maybe break even or small loss but make profit when customer buy again later
 
Most likely, the guy is just making leads, he gets this very margin and makes money on volume
 
Yeah, you're right to be confused. Most likely, he's banking on customer lifetime value (CLV). The first sale might be a loss, but if customers come back and buy more in the future, the overall profit could make up for it. So, he's probably looking long-term, not just that first sale.
 
wwa2b said:
I'm watching this YT video about FB ads and the guy says he's very happy with a cost per purchase of $35, even though he's selling $50 polos.
I find it strange since he cannot be making any money, and is more likely losing $ on each sale.
What am I missing? Is he counting on customer lifetime value, betting that the profit will come from future purchases?
Click to expand...
why do you think he only relying on selling shirts for profit
there could be plenty of upsells or even bundle products involved ??
 
Bundles, maybe, but sells nothing but polo shirts
 
you’re missing the backend
$35 cpp on a $50 product can still work if they make money after the first sale

email flows, upsells, repeat buyers, bundles, all that
a lot of people are fine breaking even or even losing a bit on first purchase
as long as ltv > cac they’re good
also could be higher margins than it looks, $50 price doesn’t mean $50 cost obviously
 
is he factoring in any other revenue streams or just relying on the polo sales for profit?
 
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