The document outlines how to establish performance-based budgets for e-commerce, highlighting key concepts like growth strategy, unit economics, and cost analysis. It emphasizes the importance of reducing risks, maximizing functionality, and maintaining financial health through effective budgeting techniques. Additionally, it provides specific metrics such as target CPA and ad spending to guide strategic decision-making.

1. P R E PA R E D F O R
UCI
03/15/17
B u i l d i n g F o r S c a l e : H o w To S e t
P e r f o r m a n c e B a s e d B u d g e t s

2. 2

3. 3

4. 4

5. 5

6. 6

7. 7

8. 8
What is e-commerce?

9. 9

10. 10

11. 11

12. 12

13. 13

14. 14

15. 15

17. F i x e d
B u d g e t
P e r f o r m a n c e
B u d g e t

18. W h y O p e r a t e O n A P e r f o r m a n c e
B a s e d B u d g e t ?

19. R e d u c e s R i s k + I n c r e a s e s U p s i d e

20. A l l o w s Yo u M a x i m i z e T h e
F u n c t i o n a l i t y O f Yo u r To o l s

21. R e m o v e s C r y s t a l B a l l P r o j e c t i n g

22. A c c e l e r a t e s P r o d u c t M a r k e t F i t
A n d I n c e n t i v i z e s Te s t i n g

23. F o c u s e s O n T h e “ R i g h t G o a l s ” A n d
P e r p e t u a t e s F i n a n c i a l H e a l t h

24. H o w d o y o u b u i l d a p e r f o r m a n c e
b a s e d b u d g e t ?

25. I d e n t i f y A G r o w t h S t r a t e g y
p r o f i t v s . c u s t o m e r s

26. What is the cost of 1 unit
(fulfilled all the way to the customer)
U n d e r s t a n d Yo u r U n i t E c o n o m i c s
Operating Cost Of Necessary Functions Of Sale
Units/Order
Average Order Value
Fuel Profit
COGS

27. S e t Yo u r C PA
Fuel Profit ($) “Goal” Profit ($) Target CPA ($)- =

28. 15
Purchases
CPC
Conversion Rate
AdSpend
X =
.8%X =
$1
AdSpend
~$2,000/Ad Set To Determine Viability
Average CPC = $1 Average CR = .8% 15 Purchases To Optimize
D e t e r m i n e T h e C o s t O f V i a b i l i t y

30. Growth Strategy
Goal: Maintain a 40% Net Result On
Customer Acquisition

31. Unit Economics
1.7
$40
$7
QALO
$28
What is the cost of 1 unit
(fulfilled all the way to the customer)
Necessary Operating Costs
Units/Order
Average Order Value
Fuel Profit
COGS

32. Target CPA
$12
Using FB Default 28 day click and 1 day view
Fuel Profit ($) “Goal” Profit ($) Target CPA ($)- =
$28 $16

33. Ad Spending By Month
0
20000
40000
60000
80000
Ad Spend
January August
$300
$80,000

34. T H A N K Y O U