As online retailers and marketers, most of us are familiar with the Cost of Sale (COS%) metric that lets merchants know the actual total cost of converting an item relative to the revenue it generated. For those who may not be, here is the formula:
COS% = Click Costs for Product ÷ Product Revenue
For example, if one item with a $100 price tag sold and took $15 in click costs to convert, the COS% for that item at that point is 15%. Each merchant decides what their COS% threshold is based on their total selling costs, so an acceptable COS% for one merchant may not be acceptable for the next. There’s no denying that this is an important metric to monitor from the perspective of controlling costs. After all, it doesn’t do much good to sell a product online if it is not converting frequently enough to be profitable.
Now That Begs One Question