Question

I got the following stats for a campaign: CPC: 2. 25 USD CVR: 3% My (COS) cost of sales target of 30%. At what level does the average order value (AOV) need to be to be on target? I calculated it this way: 100 clicks=225 USD (100*2. 25 USD) This will give me 3 conversions (100*0. 03) for a cost of 225 USD. 1 conversion will cost me 75 USD (225/3) COS=75 USD. 30% * AOV=75 USD AOV=75/30%(0, 3) AOV=250 USD My answer will that the average order value needs to be 250 USD to be on target. Have I done my math properly?  

Answer 1

Yes, so long as you don't expect the real world to behave that neatly, ie note how far out of whack everything goes even with small declines in conversion rate .  

Answer 2

Agree with @isleana118 plus Aov is also not the easiest metric to control. Generally that metric remains stable and cpc and cvr will vary more depending on your optimizations.  

Answer 3

This was more of an assignment I got. They wanted to check my knowledge