Using the same shirt example as above, the second ad is getting close to being shut off.
Since my profit margin is about 39% on this product, I’m actually losing money on this ad listing.
I’d shut this ad off, personally.
Revenue from ads = $91.32
Budget Spent = $58.09
Gross profit margin: $91.32 x 39% = $35.61
Loss on ads = $35.61 – $58.09 = -$22.47
Now some sellers ask: “Why would you be willing to spend ads just to give up your profit to Etsy?”
Valid question.. But here’s how I look at it.
I wouldn’t have had that sale without Etsy.
If that person buys from me, they’ll love my product and come back and buy more from me (without ads) in the future.
I’m in it for the long run. I want more customers to try my products so they can tell their friends, spread the word, etc..
One mistake I see ALL THE TIME is not spending enough on ads.
Let me take you through some simple math.
The typical conversion rate for my shirt listing is about 3% (about average).
That means I will need 100 visits for that shirt to get 3 sales.. Or 33 visits for 1 sale.
If I spend $1 per day, it will take me SO long to get to 33+ visits..
Hear me out… and let me break it down.
If my average Cost Per Click on Etsy is $0.21
And I spend $1 per day… $0.21 x 33 (visits needed for 1 sale) = $6.93
This means I’ll have to spend about $6.93 to get one sale.
Since I’m spending $1 per day, that will take about 6-7 days! WOAH!
Personally, I want results WAY faster than that.
Now, what if I increase my budget to $7 per day?
You guessed it.. I just got my sale for the day..
And as long as I profit after that ad spend, I can continue to spend that forever and still run a sustainable and growing business.
In summary, if you have enough profit margin in your product, you should be advertising it.
Have any questions?
Email me firstname.lastname@example.org
P.S. If you want to increase your Etsy sales and grow your Etsy shop into a profitable and sustainable business, try Everbee.io
– it’s free to start.