The maths that keeps you employed: CPC, CPA, ROAS

The same reassurance as Module 1

This is the most numerate lesson in the Program, so the Module 1.5 promise applies again: the maths is multiplication and division, one number at a time, every line of working shown. If you can split a restaurant bill, you can do all of it. And the same stance holds: a rough number written down beats a precise number you never worked out. Your inputs will be estimates. Label them and calculate anyway — you'll see below how robust the decisions are.

This lesson is what turns "we spent €500 on ads" from a confession into a decision. When a budget-holder asks "was it worth it?", you'll answer with arithmetic. When a platform rep says "just raise the budget", you'll know the number above which they're right.

Three definitions, one micro-example

Suppose a campaign spent €120, got 150 clicks, and 6 of those clicks bought.

CPC — cost per click = spend ÷ clicks.

€120 ÷ 150 = €0.80 per click

CVR — conversion rate = conversions ÷ clicks.

6 ÷ 150 = 0.04 = 4%

CPA — cost per acquisition = spend ÷ conversions. €120 ÷ 6 = €20. But here is the formula that makes you dangerous, because it works before any money moves:

CPA = CPC ÷ CVR
€0.80 ÷ 0.04 = €20

Same answer, different power: give me a click price and a conversion rate and I can forecast what a customer will cost — on paper, in advance, for free. Every allocation in this lesson is built from that one formula.

Working backwards from Module 1

Module 1.5 gave you a target CAC — the most you choose to pay for a customer (CLV ÷ 3), with break-even (CLV itself) as the never-cross ceiling. Flip the CPA formula around and your target CAC tells you the most a click may cost:

maximum viable CPC = target CPA × CVR

Now watch it decide something real. Ostara's CLV is about €54, so her target CAC is €18 (54 ÷ 3). Her sitewide conversion rate is 1.4%.

€18 × 0.014 = €0.25   the most a cold click may cost at target
€54 × 0.014 = €0.76   the absolute break-even ceiling

Twenty-five cents a click, to hit target. Her account's actual prospecting clicks cost €0.42, which forecasts:

€0.42 ÷ 0.014 = €30 per customer

€30 against an €18 target. Against the €45.24 of margin a first order carries (78 × 0.58), it's above water — about €15 of gross contribution per customer, before overheads, and before Lesson 5 tells you how much of that "attribution" to believe. Say it plainly, because pretending otherwise wastes people's money: a €54 CLV forbids most paid acquisition. That is not a failure of Ana's marketing. It is her unit economics talking, and hearing them is the skill.

Forbidden is not permanent, though — and the two exits are worth more than any bidding trick:

• Raise CVR. On a dedicated gift page (Module 4) planned at 2.5% instead of the sitewide 1.4%, the ceiling becomes 18 × 0.025 = €0.45 — and suddenly her real €0.42 clicks forecast 0.42 ÷ 0.025 = €16.80, under target.
• Raise CLV. A €120 gift set carries 120 × 0.58 = €69.60 of margin in one order; the Module 8 flows exist to lift the 19% repeat rate. Every euro of CLV buys headroom for acquisition.

The difference between forbidden and viable was never the click price. It's the page and the repeat rate.

ROAS, and the break-even most dashboards hide

E-commerce dashboards report ROAS — return on ad spend = attributed revenue ÷ spend. Revenue, note. Not margin. You cannot spend revenue — Module 1.5's oldest lesson — so every ROAS has a break-even determined by your gross margin:

break-even ROAS = 1 ÷ gross margin

Ostara, at 58% margin:

1 ÷ 0.58 ≈ 1.72

Below 1.72, an Ostara campaign loses money while reporting a positive return. And the thinner the margin, the crueller the trap: at a 25% margin, break-even ROAS is 1 ÷ 0.25 = 4.0 — so a proudly reported "3× ROAS!" is a loss wearing a medal. Ostara's reported 3.1 clears her 1.72 comfortably… and Lesson 5 will show you why even that number deserves a hard look.

Which metric steers you? Lead-gen businesses steer on CPA — Herzog, Storkflow — because revenue arrives later, offline, per patient or per firm. (Storkflow, from Lesson 2: €13 clicks ÷ 3.4% = €382 per trial against a €340 target — close, and the landing page is the lever.) E-commerce steers on ROAS because revenue is attributed at checkout. Know which you are before you open an ad account.

The €500, fully worked — Herzog Physio

The module-project template, every line reasoned. First, what a conversion is worth. Herzog's conversion is a booked €80 Check-up, and Tomas estimates 7 in 10 Check-up patients continue into a course of treatment:

€191 CLV per patient (M1.L5)  ×  0.7  ≈  €134  planning value per booking
€64 target CAC per patient    ×  0.7  ≈  €45   target cost per booking

Totals: €500 exactly. Forecast ≈ 11 bookings ≈ 7–8 patients (11 × 0.7 = 7.7). Blended, excluding the reserve: 425 ÷ 11 ≈ €39 per booking. And the number worth staring at: if the reserve buys nothing, 500 ÷ 7.7 ≈ €65 per patient — one euro over the €64 target. That is how thin the margin on a good plan is. Bad plans don't miss by a euro; they miss by a multiple.

Why these lines. Search gets 60% because it's the cheapest demand available and it's capped: 176 clicks against ~2,900 monthly searches is already ~6% of everyone searching — this line cannot usefully absorb much more, which is precisely why the rest goes to demand creation. Meta gets €125, not less, because a thinner slice couldn't accumulate enough data to judge (Lesson 3's rule). The reserve exists because two of the five inputs are guesses.

What would make it wrong. The €1.70 CPC (a planner range, not a Graz auction result). The 5% CVR — the biggest guess on the page; the M4 baseline counted form views, not page visitors. The 7-in-10 continuation rate (Tomas's front-desk estimate). And counting itself: bookings must be tied to ads via the Tally form plus a "how did you hear about us?" field, or week four's argument is unwinnable. Capacity, at least, is fine — the clinics run at 68% of 240 weekly slots, so ~77 slots stand empty.

Week one, watch three things only: the search-terms report (bad searches → negatives), actual average CPC against €1.70, and clicks versus form views — a big gap there means the page is breaking its promise (message match, Lesson 2). Not conversions. One week of conversions is noise.

Kill rule, pre-committed: any line above €60 per booking after €150 spent is paused and its remainder moves to the other line. (€60 per booking ≈ €86 per patient — over target, still under the €134 ceiling: paused for underperforming, not for bleeding.)

And the honesty footnote: €500 in a month is 3.3× Tomas's real €150 budget. The plan is the module's hypothetical. His real-world version is the search line alone at €150/month — 150 ÷ 1.70 ≈ 88 clicks × 5% ≈ 4 bookings, €37.50 each, ≈ €54 per patient. Same arithmetic, same verdict, smaller scale. A plan that only works at a budget you don't have isn't a plan.

The allocation logic, extracted

① Fund the highest-intent demand first, to its natural cap — search volume is finite and cheap per conversion. ② Then demand creation, with tested creative. ③ Hold 10–15% in reserve, with a written deployment condition. ④ Never slice so thin a line can't learn. A 60/25/15 shape fell out of Herzog's numbers; yours will differ. The shape is a result, not a rule.

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