Your average order value might be increasing while your actual profits are silently disappearing - a paradox that's bankrupting e-commerce stores every day.
In this episode of Ad Spend Secrets, Luke Smith shares the exact unit economics calculator his agency uses to pinpoint profitability and scalability for clients.
Using a real-world example, he reveals how seemingly minor factors - like items per order - can drastically impact the bottom line of your Shopify store.
Discover the common pitfall of confusing cost per item with cost per order, especially when running e-commerce promotions.
Luke also demonstrates how discounts can boost average order value (AOV) while squeezing profit margins if basket size increases.
You’ll learn to calculate crucial metrics like break-even CPA, minimum ROAS, net profit per order, and the LTV/CAC ratio to determine ad spend scalability.
Key Points:
00:01:00 The forecasting blueprint 00:02:32 Variable costs exposed 00:04:00 Basket size danger zone 00:06:00 Shipping margin impact 00:07:25 Calculate real profits 00:08:48 Master performance metrics 00:09:32 30-day LTV advantage 00:10:17 Know your break-even point 00:11:15 Double profits instantly
Ready to master your e-commerce unit economics?
Tune in now to access the forecasting tool Luke's agency uses - and uncover hidden profits within your existing sales. Let’s boost your e-commerce profitability today.
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