Okay, welcome back. In this video, I want to go over some really important formulas you need to know. And you need to be tracking and comparing with the results that you're seeing when you're monitoring your dashboard. And these are very important to media buying on any platform, but especially with what we're talking about with Facebook ads, you want to know these formulas, you want to be using them. And my advice would be to create some kind of chart in Excel or PowerPoint where you can actually track your progress and visually see these numbers getting better and better, okay, because that's ultimately what we want. We want our return on investment to grow.
So this first one is the return on investment, also known as ROI. We're basically going to be using two different abbreviations here one is cost per click and one's earnings per click. So the cost per click is essentially just going to be whatever you decide to pay per click when you're Creating your ad. Okay, so if it's 50 cents per click 40 cents, you know, that number will go down as your ad start to convert and you start to get better clicks. I'm also going to be looking at your earnings per click, which is an extremely important number, you want to get very familiar with this, but your earnings per click is essentially just going to be your sales divided by your clicks. Okay, so if you had a $200 sales, and you had a, you know, 50 cent, or if you had 50 clicks, then you'd be looking at about $4.
Okay, so you have a $4 EPC, which is really good. Okay. So the formula for your ROI, when it comes to paying per click, is you essentially just want to take your earnings per click, you want to subtract your cost per click from that, and then divide that number by your cost per click, and then multiply that number by 100. So I'll give you a couple scenarios here. Let's see, you know, let's say we have a, say we have a $4 EPC that we're talking about. And then we subtract that by our cost per click, let's say we're paying 50 cents per click, subtract that by 50 cents, or divide that by 50 cents and then multiply by 100 to get the actual percentage, okay?
So that's going to equal our ROI. So if you do the math on this, you'll see that you actually had a 700% ROI. Okay, so that's really, really good. Okay. The next scenario would be, let's say we had an as I said, we had our EPC was the same as our cost per click. So point five minus point five.
That's going to be zero, right? And if you remember from On this third grade or fourth grade math, if you divide zero by any number, that's going to be zero. And if you multiply zero by 100, you're going to get a zero percent ROI, which basically means that you broke even, okay? So if your earnings per click is the same as your cost per click, then you break even essentially, okay, which if you're first starting out, and you're running your first few campaigns and you break even then you're doing really well okay? So don't be discouraged by that. Now, where you want to worry is let's say you've got, you know, a 25 cent earnings per click.
And you've still got that 50 cents cost per click. Multiply that by 100 So now we're looking at a loss of, you know 50%. Okay, so 50% net loss. So when we look at these numbers, we just want to make sure that we're, you know, if we're, if we're in the beginning, if you end up losing a little bit, that's why we recommend not, you know, going in guns blazing on every campaign trying to like, you know, have a huge budget because you want to make sure these ads are converting, not only are you getting a lot of clicks, but then when those clicks are landing on your page, they're actually you know, converting, you're making money and you're not just spending money, okay? You may have to spend a little bit to learn, but you want to get to that breakeven point and start making a positive return on investment as soon as possible.