Digital Prosperity Blog

The Profit Formula

The biggest problem in business is making a long-term, sustainable profit you and your family can rely on.

But really, it all boils down to one simple formula...

PPL - CPL = Profit

Let me explain...

The first section of this formula is "PPL", which is short for "Profit Per Lead".

This is an average of how much money you make in sales (or "gross profit" for the business nerds reading this!) from each lead/subscriber on your email list.

So for example...

If you had 1000 leads/subscribers on your email list, and over their lifetime, you made $4700 in sales from them (for easy math), you have $4700 divided by 1000 leads/subscribers - which is a gross profit of $4.70 per lead.

And of course, when they buy your products and services, they should feel happy about their purchases because they're solving their problems with a good experience.

But that should go without saying!

Next in the profit formula, we have "CPL", which is short for "Cost Per Lead".

This is an average of how much it costs you (in advertising spend) to get the leads/subscribers onto your email list in the first place.

So if you spend $120 in advertising (e.g. Facebook Ads) and acquire 45 new leads/subscribers, that's $120 divided by 45 leads, which is $2.66.

This means on average, in this example, you're spending $2.66 to acquire each new lead, but you're making $4.70 from each lead after they go through your sales funnel - giving you a $2.04 NET profit per lead.

Here's how it looks in the formula...

$4.70 PPL - $2.66 CPL
= $2.04 NET Profit Per Lead

This means for every 1000 new leads you get, you can expect to take home $2004.00 in NET profit... 10,000 leads makes $20,004.00... And so on.

Of course, these are "worst case scenario" numbers, as our own campaigns actually have over a $6 NET profit per lead, meaning I take home over $6000 for every 1000 new leads that join my list - while they get the best help we can possibly give them.

Now the issue that most beginners have is making their advertising compelling enough to acquire new leads at a decent price.

After all, if you're spending over $10 for each lead, your sales funnel needs to be making over $10 per lead to make a profit - which is difficult to do without a high-priced, high-value offer and a range of compelling products which sell/"convert" well.

And quite frankly, most beginners don't have these things in place!

So ideally, you should be acquiring new leads for less than $3 each.

That seems to be the magic number for most of my coaching clients when they're just getting started.

This is because it becomes VERY easy to make more than $3 per lead from your sales funnel if it's set up correctly.

To get your traffic campaign to reach this magic Cost Per Lead number, it's all about making your ad as compelling to your ideal prospects (i.e. the people most likely to buy your offers) as possible.

Simply find out what they want - nay, what they would crawl over broken glass for - and give it to them!

Then once you've acquired the lead, your sales funnel takes over and generates sales while helping people.

The outcome of this process is a machine that generates more money in sales than you invest in traffic. It's the equivalent of giving somebody $1, then them giving you $3 or more back.

To do this, focus as much of your effort on these two variables. Reduce your Cost Per Lead as much as possible, while optimizing your sales funnel to make as much profit as possible.

That's how you create a profitable campaign and scale your business to six - and seven - figures per year.

If you'd like some extra help with this, we have a brand new "done for you traffic" service launching next week for just 5 people who get in quickly. I'll personally set up your entire Facebook Ads traffic stream for you, and optimize it UNTIL it reaches this magic CPL number of less than $3 per lead.

This means you'll never have a traffic problem ever again.

I'll be sharing the full details on Monday at 12pm EDT, so stay tuned.

Have a great day!
- James Francis.

P.S. Any comments or questions? Let me know below! 😀

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3 Responses

  1. Thanks James, I guess I could make the $3 cost per lead. But my guess is that making more than $3 per lead through my funnel and e mail marketing as well, I may have probs with that.
    I like the idea of rinse and repeat. Adverts are easy to tweak and test. Especially now with the internet and the wonderful quick technology we have.
    I can see exactly how this process works. I'm also exited with the idea of giving it a go too.
    I remember something you said in your blog posts a while ago. You said that everything other than advertising, testing and tweaking is a distraction and should be avoided. That message for me is slowly hitting home. I've been round the ZERO PROFIT course once, I don't want to do it again.
    Anyhow, thanks once again for your ongoing help. I appreciate it.

  2. hey james,

    A great post and some very valuable information just like your sixfigureshortcut program.
    so many people fail to implement these basic but essential things into their business keep
    up the great content james. Hopefully one day I can make enough money online to
    quit my day job!

  3. Thank you, for this very helpful information. Your contents on this site are far more valuable than paid ones. Great computation, basic and necessary things to make our business profitable. These bite size nuggets of wisdom is very helpful to beginners.

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