HOW MANY ORDERS BEFORE YOU SHOULD START SCALING YOUR ADS? – Shopify Drop Shipping Tutorial
Today, I’m going to answer a question from Abra. The question is: how many orders do you need for an ad before you start scaling that ad? Continue reading or watch my video to find out my answer.
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How Many Orders Before You Should Start Scaling Your Ads?
How many orders do you need for an ad before you start scaling that ad? The answer to that is as soon as I have one order, I’m going to start scaling. I’m not scaling based on sales. I’m scaling based on if I’m profitable or not. And there’s a huge difference between the two.
When you see a lot of people on Facebook groups posting screenshots of how much they’ve made that day, like $2000 for example. Well, that’s great for them but it doesn’t say if they’re profitable or not. Let’s say they made $2000 in sales, but we don’t know how much they spent on the cost of the product and their Facebook ads or other ads they’re using. Even if someone makes $100,000 in one day, they can still lose money. Sales doesn’t tell if someone is profitable or not.
Base it on profitability, not sales.
When I started in e-commerce, I also did the same mistake. When I was making my decisions every day if I should lower or raise the budget or kill the ad, I used to look at the total website conversion of my adset. Then I would look at how much I’ve spent and how much I’ve made. And then, I would make my decision based on that. But that’s not really the optimal way of doing it. What I do now is I do it daily. I lower the budget, raise the budget and kill ads sometimes every single day. I look at what I’ve done the day before and make a decision on what I would do with that adset. I try to do it every single day. It doesn’t take long and that’s what I recommend people to do.
Because I’m basing it on profitability, I’m able to know automatically if I’m profitable or not. For example, if I’m selling a product for $50 on my Shopify store and the cost of the product and shipping on Aliexpress is $10, I already know that my margin before Facebook ads is $40. Without the cost of the ads, my margin is $40. What I do is I have an excel sheet of all my products and I know exactly what my margin is before Facebook ads. then I look at my Facebook reporting. Let’s say for that day I sold one unit of that product for that particular adset, I already know that I’ve made $40 before I spend on my Facebook ads. Let’s say I spend $10 on Facebook ads, it means that I’ve made $30 total profit. Obviously, if I see that I made $30 profit for one sale, of course, I’m going to raise the budget. As soon as I’m profitable, I’m raising my adset. I’m not waiting for 5 or 7 days, and I don’t wait to make a certain number of orders before I adjust the budget.
Let’s say I spent $10 for that day, I might raise the budget to $20 for the next day. If on the next day I make two sales for example, after doing the math and I see that I’m still profitable, I will raise the budget again. If one day I make no sales and I spent $30 on Facebook ads, then I’m going to lower the budget.
Lowering or raising the budget is something that I do every day and I do it based on profitability. It’s the total profit that I’m looking at before making a decision. Forget about sales. A lot of people make that mistake. Sales doesn’t give you a good indication if you should scale or not. When I’m doing coaching, I see people are scaling their products that they’re not making money with. They’re scaling products and they’re just breaking even every single day. It’s basically a waste of time.
The number one thing that you need to do is to know your numbers. Know your profit margin before Facebook ads so when you look at your Facebook reporting, the only thing you have to know is how much you’ve spent that day on Facebook ads. then you deduct that amount from your margin and you should know if you made a profit or not. Then, you can decide whether you should lower or raise the budget. That’s how I do things and I highly recommend you to do the same.
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