FREE CPO Calculator – Calculate Cost Per Order

There is a formula to find the CPO of an order. But manually using the formulas each time a product gets shipped from your online store, can cost you energy and time.

Here comes the CPO calculator.

With our calculator, you simply need to enter the values of two variables, and you will get your CPO. In this article, we have discussed various topics on CPO, and eventually, you will be introduced to the best CPO you’ll get on the Internet for your online store.

What is Cost Per Order (CPO)?

Cost Per Order is a method to find the actual cost of an order starting from marketing it and shipping it from your inventory. Often known as CPO is used as a model to find costs for advertising products online.

In short, this model is to find the average marketing costs of a product to make the purchase from your store.

Some people confuse CPO with CPA (Cost per acquisition). However, these two aren’t alike. CPO calculates costs for both new and existing customers, whereas CPA ignores costs for existing customers.

Common Order Costs Which Are Overlooked

Whether starting a new business or working to improve profits for your existing business you must look into every cost variable for your sales. Most entrepreneurs forget about the costs which are required to maintain products and provide services to their customers.

You might not find enough profits if you forget to consider the valuable variables, like the different order costings. There are many common order costs that are often overlooked by merchants which ultimately exceed their budget.

Research expenses, incorporation costs, taxes, IT and Web Development support, business insurance, permits, licenses, and dues, are some of the common costs which are often ignored by merchants. Furthermore, below mentioned are a couple of order costs that are overlooked by the majority of entrepreneurs.

Let us learn more about them.

Advertising/Marketing Costs

Any company big or small will require advertising or marketing of their products to increase their sales and reach. Without promoting the company’s service, you will not likely get any orders.

This is the sole reason, why companies should look into their marketing budgets. Sometimes, the marketing might not be enough to drive new customers to your online store, which will force you to increase your ad campaigns and thus increase your marketing budget.

You might need to spend more on YouTube videos, and blogs, hosting events to spread awareness, and reaching out to potential customers. This all comes with costs. Most companies do not look into their marketing budget and end up overspending on their advertising campaigns.

But you should not do the same mistake as others. You must consider this variable when trying to reduce your CPO. Besides this, you can even contact an advertising agency, and ask them to promote your company products since they will understand the algorithm of advertising more than you.

Custom Packaging

Most online stores offer custom packaging features that can cost you much more than you expected it to. Thus, if you are offering this feature to your customers, then you might very well consider looking into its expenses.

Some customers can ask for custom packaging for their order, which will cost you much more, than your usual packaging. You must not ignore these order costs and set up price ranges for custom packaging.

Ask for additional charges if the custom packaging of orders exceeds the projected shipping charges. However, ensure that the additional charges for custom packaging are not too high, or else you might end up losing your potential customers.

Considering your order costs will help you greatly identify your overall cost, and plan your other budgets accordingly. These variables are of great essence when you wish to implant a successful online store business.

Cost Per Order Formula

The Cost Per Order metric is of great essence when starting any online business, and when preparing a budget to draw customers for your store. CPO can be calculated using the total advertising costs and the number of orders made from your online store.

Hence, the equation stands out to be like, CPO = (Total advertising cost) / (Number of orders).

How do you calculate CPO?

CPO incorporates all the costs made during generating leads for an order, during purchase, and shipping the product. Mentioned above is the formula to find the CPO of an order.

You need to find all the costing for the actions, and divide them by the number of reactions. However, you must not consider CPO as the net income of your business.

At times, this might not give you the exact number, so you should vigilant enough to find even the minute spending. Even small spending for marketing needs to be registered when calculating the CPO of an order.

Cost Per Order Example

Here is an example for you, to get acquainted with using the CPO or Cost Per Order formula.

For instance, if your total cost of marketing a product is around $500 dollars, and it generated 50 sales over a certain period of time. For now, let us take it as within a quarter of a year.

So, to find the CPO of this order, we will use the CPO formula.

CPO = Total advertising Costs / Number of Orders

Substituting the values we get,

CPO = 500 / 50

CPO = 10.

This means, your cost per order is $10. To simplify it more, you spent $10 off each of your products to find potential customers to sell it from your store, and complete the shipping.

How To Use The CPO Calculator?

Ecombusinesshub.com CPO calculator is the most effective calculator when trying to find the CPO of your order over a certain period of time.

To use the ecombusinesshub.com CPO calculator, you can start off with these steps.

• Click on this link to find the ecombusinesshubs.com calculator.
• Now, you have to enter your total costs spend on your product. Ensure that the total costs include marketing, sales, and other overhead costs. Only then you can find the actual cost of your orders.
• Next, enter the total number of purchases. You can find this data from your inventory data, or through other sources.
• Click on Calculate, and find the CPO. For instance, if you enter $400 as your overall cost behind the sales of a product, and your total number of orders is 4, then the result will generate $100.
• Click on Reset to clear the result and find CPO for another order.

So this is how you can use the best CPO to find the cost per order for your online store.

Why is CPO important?

As said above, CPO is of great essence. Most importantly, this metric helps you find out if your ad campaigns are a success or not.

For instance, if you have spent $300 on your ad campaigns, which only cover blogs, and newsletters, which only generated a few customer-company conversations then it simply means there are significant things that could be improved in your advertising campaign.

The CPO should include all the variables like service costs, cost of production, and even other maintenance charges. Only then you will get a meaningful number that can identify the success rate of your ad campaigns.

How To Reduce CPO?

When starting any business your first priority should not be to get customers for your store. Instead, it should reduce your order costs. Only if you can optimize your order costs, and provide a reasonable price for your product, you will attract more traffic to your store.

Hence, you should look into different methods which will help you lower your CPO. Below mentioned are a few variables which you should consider to reduce your CPO.

1. High Cost of Goods Sold

Sometimes, the high cost of your goods can ruin your chances of getting an order from your potential customers. Thus, to decrease your CPO you should consider lowering the prices of your goods, to a reasonable price range.

You can even consider substituting your high costing products with low-costing products. However, to this, you need to ensure that the product quality is not comprised, or else this might again ruin your sales.

2. Shipping costs

Shipping costs are of huge importance when you operate an online store. Most online businesses now offer free shipping which burdens the other merchants to offer the same benefits.

It can be hard to provide free deliveries for all of your products. Perhaps you can put a threshold in shipping rates for your loyal customers.

3. Warehouse or Storage Costs

Warehouse or storage costs can pull a lot of money from your budget. Maintaining warehouses at different locations is always a pain for online merchants. However, when supplying your own products, you can fill your storehouse with specific niche products, and only the trending products.

This will not only help you in lowering your CPO but it will even reduce the cost of managing your inventory or warehouses.

4. Process orders faster

Processing your orders at a fast rate will help you gain customers due to the quick delivery. To ensure this happens you set up multiple warehouses at your potential customer’s locations.

However, you must ensure that setting up multiple warehouses or inventories does not exceed your budget. You can merge with different shipping companies, which offer speedy deliveries This strengthens the bond between customers and companies, which ultimately reduces the cost of ad campaigns to bring them back to your online store, for more purchases.

5. Get Discounts on shipping rate

Providing discounts to your shipping rates can bring your customers, furthermore reducing CPO for your orders. As mentioned above, providing free shipping might not be possible for all your orders.

But you can set up discounts on minimum spending, which will not help you gain customers but will even increase your sales. To meet the shipping threshold, customers will have to order something of a higher amount, or multiple orders, which helps in lowering CPO.

6. Outsource to 3PL

3PL are third-party logistics that help merchants manage and maintain their supply chains. The 3Pl companies are more like eCommerce fulfillment companies, providing various services to fulfill customer demands.

Outsourcing your brand with 3PL companies can provide you with ease when processing and completing orders for your customers.

CPO FAQs

Below are frequently asked questions regarding Cost per Order!

What is a normal CPO?

Normal CPO or Cost Per Order is to find the average marketing spendings which are spent to provide products to your buyers. Every merchant should use the CPO formula to find the success ratio of their marketing.

It helps merchants in preparing a more concise and effective marketing budget.

Is the eComBusinessHub CPO Calculator Free To Use?

Yes, eComBusinessHub’s CPO calculator is total and free to use. You can visit the site to use the calculator to ding CPO of your products, as many times, as you want.

There are no limits to how many times you can use eComBusinessHub’s CPO calculator.

Is the CPO calculator useful for dropshippers?

CPO calculator might not be as beneficial for drop shippers as it is for merchants holding their warehouse and inventories.

Since dropshippers have nothing to do with shipping their products or maintaining their warehouses, it is not so useful. However, every merchant whether drop shippers or warehouse holding merchants, need to market the products, to generate leads for their products.

When we consider this fact, the drop shippers, also need to market the products, to bring potential customers to the sites, and should use the CPO calculator to find their marketing costs.