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how to calculate if a price change is profitable?
I want to increase my prices, and then review after a week to see if it’s a profitable move.
If I track conversion rate, then I imagine it would be lower, but this wouldn’t tell the full story if the people still buying are spending more because of higher prices.
So, what would be a good metric to use to determine if the price rise is profitable through comparing week on week? I was thinking revenue/profit per unique user/ click?
Any help appreciated, I could be missing something here but I think that’d work.
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3 Replies
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You would need to know conversion rate, which will almost certainly be lower than it is currently. So there’s no way other than to experiment. You could guess by doing the calculation with a lower CR and get a better idea.
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Volume vs. margin. Total revenue – total cost, sort out the top level P/L first.
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Roas/Roi are two good metrics, but at the bottom line you really want to look at margin.
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