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I think the author underwrote very conservative numbers. You can always adjust the math on your own. His reasoning is sound though. IF you list the price in th

I think the author underwrote very conservative numbers. You can always adjust the math on your own. His reasoning is sound though. IF you list the price in the ads, that would maybe explain the measly 1% CTR and high CPC's (Low Quality Score). I have rarely seen a case where charging more didn't increase profits, even if you lose sales and get some bad clicks. (within the context of providing the perception of more value than the price.) His point is simply, take the most expensive source of traffic online and underwrite to solve for the bottom line margins you need to advertise.

primatology 15y ago
> "take the most expensive source of traffic online and underwrite to solve for the bottom line margins you need to advertise." Sure, but if you assume away all other sources of traffic, you're finding a break-even price. The reason this might actually make you profitable is because you've got nearly-pure profit flowing in from "free" sources: word-of-mouth, organic search engine results, good reviews, etc. Which means your price may be much lower than optimal, if your book appeals to an audience with lots of disposable income. Or, perhaps, only people searching for "speed reading" on Google will actually buy a book about it, and no one else in the world cares enough to spend $20 on improving such a skill. And your price may be far too high to be profitable. There's a ton of selection bias in using Google AdWords as your baseline. Plus, you discount 2.5k searches for "how to speed read," 2k searches of "how to read faster," and 1k for "speed reading techniques". You can't easily add them to the formula, since they all have different conversion rates. Users searching for "how to speed read" will be far more receptive to a ebook about speed reading than someone searching for "speed reading" in general.
- davemel37 15y ago
  I agree in practice this formula is not very practical. It is however a good place to start in getting a picture of what it takes to buy customers in your industry. (Bear in mind the author is talking about math before ever building your product.)

primatology 15y ago

> "take the most expensive source of traffic online and underwrite to solve for the bottom line margins you need to advertise." Sure, but if you assume away all other sources of traffic, you're finding a break-even price. The reason this might actually make you profitable is because you've got nearly-pure profit flowing in from "free" sources: word-of-mouth, organic search engine results, good reviews, etc. Which means your price may be much lower than optimal, if your book appeals to an audience with lots of disposable income. Or, perhaps, only people searching for "speed reading" on Google will actually buy a book about it, and no one else in the world cares enough to spend $20 on improving such a skill. And your price may be far too high to be profitable. There's a ton of selection bias in using Google AdWords as your baseline. Plus, you discount 2.5k searches for "how to speed read," 2k searches of "how to read faster," and 1k for "speed reading techniques". You can't easily add them to the formula, since they all have different conversion rates. Users searching for "how to speed read" will be far more receptive to a ebook about speed reading than someone searching for "speed reading" in general.

davemel37 15y ago
I agree in practice this formula is not very practical. It is however a good place to start in getting a picture of what it takes to buy customers in your industry. (Bear in mind the author is talking about math before ever building your product.)