How To Calculate Breakeven CPC

When starting a campaign, it can be difficult to determine at what price to set your bids. Setting bids too high could lead to large losses and frustration at the start of a campaign, while setting the bids too low could lead to poor average ad position and low traffic volumes. Luckily there's a straightforward way to approach bid setting, and that is to calculate and set your bids at or below their breakeven CPC.

To do this, you need to have a idea as to what your conversion rate will be. You likewise also need to know what your profit for every item sold will be. With these two bits of information, you're able to calculate your breakeven CPC using the following formula.

Break even CPC = Conversion rate x profit 

In this example we assume that you know what the conversion rate is already. In the absence of campaign level conversion rate data, you should substitute your websites average conversion rate.