Attribution & Analytics
Does Lowering Your Product Price Improve ROAS?
Lowering price can improve conversion and ROAS while reducing profit.
That is why ROAS alone is a poor metric for deciding whether a price change worked.
Example
Original:
Price: $100
CPA: $25
ROAS: 400%
After lowering price:
Price: $80
CPA improves to $16
ROAS: 500%
The advertising percentage improved.
Now assume product and variable cost is $50.
Original contribution after ads: $25.
New contribution after ads: $14.
The higher ROAS created less profit per order.
Volume can change the result
If the lower price doubles customer volume, total contribution may still be larger. You need both unit economics and order volume.
Consider customer quality
Discounted customers may repeat differently from full-price buyers.
Test more than price
If conversion is weak, the problem might be:
- unclear value
- poor product proof
- shipping
- trust
- wrong traffic
Lowering the price is one of the most expensive ways to solve a problem that was not actually price.
Want to know what the number actually means?
If you are considering discounting because ad performance is weak, contact us. We can model whether the conversion gain would actually create more profit.