Your profit target is how much you want to keep from each sale after all of your costs, including your advertising, are taken into account.
We set it as a percentage of the selling price without VAT. The higher the target, the higher the ROAS bid, and the fewer auctions you win. The lower the target, the more sales you win, but the less you keep from each one.
The same £50.00 product at different profit targets
| Profit target | Profit per sale | Max ad cost per sale | ROAS bid |
|---|---|---|---|
| Break even (0%) | £0.00 | £21.38 | 2.34 |
| 2% | £1.00 | £20.38 | 2.45 |
| 5% | £2.50 | £18.88 | 2.65 |
| 10% | £5.00 | £16.38 | 3.05 |
Profit target for new or scaling brands
You might want to choose a profit target of break even or 2%. Run it for 14 days or more, then start to make 5 to 10% (relative) increments until you hit your ideal target, e.g. 10%.
Profit target for established brands
If you have a good grasp on your costs and you are going for market share, you will want to set your profit target lower, around 3% to 5%. This provides a buffer to prevent negative cashflow, and it will help you maximise market share.
Profit target for high value products
10% targets don’t scale too well on very expensive products, so be mindful of this and choose an appropriate target based on how much you want to make per sale.
Example: a £1,500 product (without VAT)
| Profit target | Profit per sale | ROAS bid |
|---|---|---|
| 3% | £45.00 | 3.13 |
| 5% | £75.00 | 3.34 |
| 10% | £150.00 | 4.01 |
At 10%, this product needs a 28% higher ROAS than it does at 3%, so it wins far fewer sales. £45 profit on a sale you win is worth more than £150 on a sale you don’t.
GROW solution
In GROW you set one profit target for your whole account, and ProfitClarityTM calculates a precise ROAS bid for every product from its MarginStackTM costs.
- Change the target for any single product, or in bulk, with a slider that shows the new profit per sale before you apply it.
- Pick a strategy for the whole account: Balanced Growth uses your target, Aggressive Growth lowers it to win more sales, Maximize Profit raises it, and Break Even sets it to 0%.
- Every product shows the ROAS, max CPA and CPC bid for each strategy, so you can see the trade-off before you switch.
