Guides
Working notes on paid media and unit economics. One question per guide, the arithmetic in full, and the mistake it usually hides.
ROAS divides revenue by ad spend, ROI divides profit by it. The one-line conversion between them, and why a 3.74 ROAS can be a gain or a loss.
Read the guide →Gross margin is revenue minus cost of goods, divided by revenue. The calculation and why the margin your ads sell can run eight points below your P and L.
Read the guide →CPL is ad spend divided by leads. The calculation, the reverse solve for break-even CPL, and why the lead count and the close rate must match.
Read the guide →Churn rate is customers lost divided by customers at the start. The formula, the denominator traps, monthly to annual, and why blended churn misleads.
Read the guide →CPA is ad spend divided by conversions. The calculation, the reverse solve, and how many conversions a CPA needs before it can justify a decision.
Read the guide →Conversion rate is conversions over visits. The calculation, the funnel version, and why a blended rate can fall while every segment improves.
Read the guide →ROAS is revenue divided by ad spend. How to calculate it, and why tax and shipping in conversion value can hide a losing campaign above break-even.
Read the guide →Marketing ROI is profit minus cost, over cost. One campaign can read +257%, +50% or -10% depending on which revenue you let into the formula.
Read the guide →AOV is revenue over orders. Two orders in two hundred can carry $25.90 of it, and AOV times blended margin overstates what you can pay per order.
Read the guide →MER is ROAS plus organic revenue divided by ad spend. The second term shrinks as you scale, so the ratio falls while profit rises. The maths, worked.
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