What this means
Pricing is not only about markup. For paid traffic, the price needs to support contribution margin, break-even CPA, and the target profit you want to keep after ads.
Formula
availableForAds = contributionMargin - targetProfitAmount
If availableForAds is negative, the target margin is not possible at the current price and cost stack.
Example
If net revenue is $50 and contribution margin is $12, a 20% target margin needs $10 profit. That leaves only $2 available for ads, which may be too restrictive for cold traffic.
Common mistakes
- Setting price from competitor pages without checking your own cost stack.
- Running discounts that remove the CPA room needed for acquisition.
- Ignoring fixed per-order fees on low-ticket products.
- Using one target margin for every product category.
Calculator
Use SellMira to test price, discount, costs, and target margin before increasing ad spend.
Check pricing margin