Cost per acquisition is what you spend to get one buyer. Average cart value is what that buyer spends in the funnel, including bumps and upsells. When average cart value is higher than cost per acquisition, you can scale.
The business that can spend the most to acquire a customer can outbid everyone else for traffic.
Do it step by step
- Add up ad spend and divide by number of buyers.
- Add up revenue and divide by number of buyers.
- If cost is higher, add or improve bumps and upsells before raising spend.