Break-even CPC (cost per click)

How it works

A store pays for clicks but earns on orders. Break-even CPC turns the break-even CPA into a ceiling on the price per click. Only a share of clicks end in an order, so a click may cost at most that share of the profit on an order.

The ceiling moves with conversion rate. At the same order value and margin, a product page that converts twice as well can afford clicks that cost twice as much. That is why the same click price pays off for one product and loses money on another. The break-even CPC guide works it out from order value, margin and conversion rate.

There is no single benchmark: it depends on all three.

Formula

Break-even CPA × conversion rate

Example

Example store, not client data.

The tableware shop has a break-even CPA of 210 and a conversion rate of 3.75%. Break-even CPC = 210 × 0.0375 = 7.88. It actually pays 5 per click, below the ceiling. If the conversion rate fell to 2.4%, the ceiling would drop to 210 × 0.024 = 5.04, almost exactly what the shop pays now.

Not to be confused with

• Cost per click — what a click actually cost on average. Break-even CPC is the ceiling it is compared with.
• Maximum CPC bid limit — a cap on the bid in each auction, set inside an automated bid strategy. Break-even CPC is an average across all clicks, not a cap for any single one.

Right and wrong readings

• Wrong: “Break-even CPC is 7.88, so no click may cost more than 7.88.” Right: 7.88 holds at the average conversion rate of 3.75%. A search that converts at 7.5% can afford clicks of up to 210 × 0.075 = 15.75. The ceiling is the profit on an order times the chance that a click becomes an order.
• Wrong: “Clicks got cheaper, so the ads became more profitable.” Right: profit is the gap between the ceiling and the price. If the price per click falls from 5 to 4.5 while the conversion rate falls from 3.75% to 2.4%, the profit each click leaves drops from 7.88 − 5 = 2.88 to 5.04 − 4.5 = 0.54.