how much to spend on ads shopify

if you're ever wondering what your ad,budget should be when you're advertising,on facebook then keep watching this,video,what's up everybody fred lam here and,welcome to my youtube channel where you,get to learn everything on how to build,grow and scale an online business and,like i said before more specifically,you're also going to get a ton of free,tutorials on how you can maximize your,results with your facebook ads right,inside my youtube channel so make sure,you check all my other previous video,training that you can essentially use to,actually get more leads and sales for,your facebook ads now in today's video,i'm going to actually answer one common,question that i always get which is fred,what should be my ad budget when it,comes to running facebook ads and if,this is the exact question that is,lurking in your mind to make sure you,pay close attention to this video in,fact i'm even also gonna give away a,hundred dollar cash to actually play a,game of the price is right with me,inside this video but before i actually,go into further detail about the price,is right and also what your facebook ad,budget should be when it comes to,running facebook ads make sure you help,me smash the like button subscribe to my,youtube channel and hit that,notification bell so that each time i,release a brand new video you're gonna,get notified right away so before i,actually go into detail on sharing with,you exactly what your ad budget should,be when you're advertising with facebook,i wanted to actually share with you a,contest that we're having on the day,that i'm uploading this video until the,next seven days and here's how you can,actually win a hundred dollars now in,this video i'm going to actually walk,you through exactly how to calculate,what we call the 2x rule which is the,maximum ad spend that you should spend,on your ads to actually see the data,that you need when it comes to facebook,ads now at the end of this video once,you actually got the formula i want you,to actually calculate your own 2x rule,and actually leave a comment right in,the comment section right down below,this video and i will randomly select a,winner to win a hundred dollar cash so,with that let's really dive right in,into the topic of today what should be,my total aspen when i'm actually testing,out my product well at the end of the,day we follow a very specific rule,called the 2x rule and what the 2x rule,means is essentially we spend only 2x of,our gross profit and if we are not able,to actually generate any sales or even,actually get the data to work the way,that we want we instantly pause the ad,or even annihilate the offer and,actually create a new offer from there,so again there's a couple steps and,parts that actually go with it but first,let me actually go and really walk you,through the entire calculation so let's,say that you are trying to sell a,product,online and it costs the consumer 20 and,that's your selling price,whether it is a,drop shipping,product or it is a digital product,you're making 60 dollar revenue now,again,this 60 dollar is not what you want to,use to actually optimize your ads,because at the end of the day these are,just revenue numbers what you need to do,is to actually calculate your gross,profit and by doing so you basically,subtract let's say the cost of goods,which costs us,ten dollars,and if you have a physical product let's,say it costs you five dollars shipping,so that's the cost of shipping,and then you also need to actually,factor in the processing fee this is,exactly,the amount that you have to pay when,you're collecting credit cards online so,when it comes to shopify and you're,using the basic plan the fees are simply,2.9,plus 30 cents per transaction so i'm not,going to actually do the math exactly,what it is but let's say 2.9 of 60,is going to be roughly at a dollar right,and then on top of that let's say that,30 cents per transaction,your actual processing fee is gonna be a,dollar 30. so with that when you,actually do the math over here which is,simple right 60 minus 10 minus 5 then,your actual gross profit is going to be,50 45,43,70. this is how much money you actually,make,per sale off of your facebook ad now,when we start running ads what we do as,i said with the 2x rule we actually,multiply this number by two so then that,means that the total maximum ad spend,that we can actually pay for this ad is,eighty dollar,eighty four dollars and seventy cents,that's the basically the max at spend,now people will be wondering well is,this ad spend should be going towards,the campaign or the asset the answer to,the question is really twofold first it,depends on how much budget you have with,your offer and if you're just drop,shipping a particular offer i actually,do this at the campaign level however if,it is a product or offer that i,basically created maybe a digital course,or it is a physical product that i,actually own i would actually do it from,the app set level because i wanted to,actually give enough of testing to,actually figure out if my product is,really the problem or not and at the end,of the day if you guys have followed me,on my youtube channel you would have,heard of the three rule that or the 3x3,app formula that we've innovated to,actually really test out to see if it is,the offer problem now with that being,said regardless if you're doing on the,campaign level or the at set level 87.40,is the maximum amounts that we should be,spending for our ads because imagine if,you even actually got a sale but it,costs you eighty seven dollars and forty,cents which is the maximum ass spend in,order for you to actually even to get it,break even you would actually have to 2x,your conversion which is hard to be very,frank so at the end of the day we use,this rule to actually give us as like,the maximum that we can actually afford,to actually spend per product to know if,it works out or not however as i said,this number is simply just an indicator,and i'm saying that this is an indicator,because,when you start running ads you're going,to actually get data which we call on,facebook data for example the cost per,click the ctr and cpm given that you,know what your gross profit is you can,actually easily calculate what your goal,is,for your ctr and cost per click in order,for you to even actually make it,profitable so right out of the gate when,you start running ads in the first,couple hours or even the first hour when,facebook actually give you,sufficient data based on your budget you,will instantly know what your,click-through rate is and what your cost,per click is followed by the cpm this,three metric combined with your gross,profit can easily calculate and tell you,if your campaign,can work or not without even needing to,spend eighty seven dollars and forty,cents,this eighty seven dollar and forty cents,which is two x rule is only going to be,spent if we actually have a great cost,per click great cpm a great ctr and,great cpm but we still want to,continuously test to actually see if it,worked out or not so in a nutshell the,2x rule is really an indicator at the,end of the day as i've said before you,want to always look at the cpc ctr and,cpm which are on facebook data that is,completely 100 accurate even with the,ios 14 update so if you actually have a,campaign running you haven't got any,sales you're getting active cards but,you have yet spent the 2x rule you would,actually want to continuously run the ad,until you make the final decision if the,ad should be paused or not which is,super duper important but as i said if,right out of the gate your ads are,getting a horrendous cost per click and,a horrendous ctr without even spending,the maximum ad spend we would actually,pause the ad right away so as i said,when it comes to facebook ads it's not,that hard when it comes to finding,targeting setting up the ad setting up,the campaign and letting it run the most,challenging part that a lot of people,are having difficulties in are,essentially understanding the data and,knowing what they should be doing with,their data so what that means at every,single time or before you even run a,facebook ad we always calculate the,maximum aspen that we are going to,actually put in so that we know what's,going to go on and we are not,advertising blindly and most importantly,we are not emotionally attached to our,facebook ads which are very important so,with that let's do the price is right do,your calculation right now leave a,comment right down below and if you do,complete this exercise you may have a,chance to actually win a hundred dollar,cash now on top of that listen i know,when it comes to running facebook ads,and analyzing the data it can be time,consuming confusing and also this is,where exactly a lot of facebook,advertiser fail is because they don't,understand the data well guess what go,check the link in the video description,right down below because now we've,forever eliminated your struggle and,guesswork with your facebook ads data go,check it out right in the video,description right down below so with,that being said i hope that this gives,you a lot more clarity on knowing what,your total ad spend should be when,you're testing out your products,especially if you are drop shipping with,shopify so with that i hope you enjoyed,this video make sure you help me smash,the like button subscribe to my youtube,channel and hit that notification bell,so that each time i release a brand new,video you're gonna get notified right,away till next time

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