Teach you how to calculate Xiaohongshu's break-even point in 30 seconds!

How do you know your ROI and whether it is worthwhile to continue when you invest in Xiaohongshu? This article shares two tables. You can use your own data to calculate the break-even point. There are also 20 additional investment guidelines, which are recommended for everyone to read.

In our opinion, it is very simple to make Xiaohongshu, there are 4 steps in total:

1. Test content;
2. Run the model;
3. Establish data standards;
4. Copy and scale!

But in this process, we still need to solve:

• Who is more efficient in creating content? (Should the company do it in-house or collaborate with experts?)
• Does content need to be invested in traffic? To what extent can it make money?

So in the final analysis, investment accounting is a math problem!

Today we provide you with 2 tables (the Excel contains calculation formulas), you can directly substitute your own Xiaohongshu data into them and quickly calculate the break-even point of the bidding!

Table Description:

1. Product basic information: fill in the basic product data directly;
2. Running the model brings: combining the result data obtained from the previous campaign on Xiaohongshu;
3. Volume expansion standard setting: The formula has been set in the table, and the result can be calculated by filling in the above data (the result represents the production break-even line of Roi=1)

Next, we will combine the above statistical table and 20 advertising guidelines to talk to you about the accounting logic behind Xiaohongshu advertising! How to make every advertising budget be spent wisely!

01 Xiaohongshu advertising strategy

Q1: How does profit margin affect marketing strategy?

A: You can’t just focus on ROI when placing ads, you also have to pay attention to profit margin. Profit margin determines the bottom line of the ad, that is, when the profit margin is high, the threshold for placing ads is relatively low. Profit margin can help determine whether the ad is profitable. This is why the table above is very important. For example: when the cost of the ad is less than a certain data point, the ad can bring profit; when the cost exceeds this data point, it is necessary to optimize or stop the ad, because it will lose money after exceeding the critical point.

Q2: For paid delivery, how to clarify the delivery standards?

A: The standard for paid advertising is based on reasonable profit margins and sustainability, and it is necessary to ensure that profits are made and no losses are incurred. At the same time, the conversion rate and repurchase situation of each link will also affect the setting of standards. Based on the received data and model calculations, the advertising strategy is continuously adjusted until the expected benefits and effects are achieved.

Q3: How to determine the product’s conversion rate and customer acquisition rate by running the model in the early stage?

A: By running the model, you can obtain objective data such as the product's conversion rate and customer acquisition rate. Calculate the break-even customer acquisition cost and expected conversion rate to derive the standard setting for volume release. In this process, pay attention to the product conversion rate and reading customer acquisition rate to determine the size of traffic and conversion status, and adjust the delivery strategy accordingly.

Q4: Should paid advertising be ROI-oriented? However, the upper limit of the amount of money that can be spent is determined by the gross profit! What is the role of repurchase rate in paid advertising?

A: Paid advertising is determined by ROI, because ROI is controllable, and gross profit determines the maximum limit that can be used for paid advertising. Repurchase rate is a key factor in paid advertising, which can help brands make up for the losses of early investment and support the operation of the entire advertising strategy.

Q5: When making placement decisions, does Xiaohongshu’s content have to be collaborated with influencers? How to determine the ratio of collaboration?

A: In the decision-making process of placing ads, the proportion of influencers and content needs to be determined based on comprehensive considerations of factors such as product category characteristics, user decision-making costs, and the efficiency of content expression. For example, in categories with high decision-making costs and branding, influencers may account for as much as 100%; while in categories such as clothing, the decision-making cost is low and users are more inclined to category logic rather than brand logic when purchasing, so when placing ads on Xiaohongshu, you can get accurate conversion traffic by producing your own content, and influencers may account for 0%.

Q6: When making an ad, can the break-even customer acquisition cost, reading cost and click cost be directly viewed on the ad delivery port?

A: Click cost and reading cost are the same concept, that is, bidding according to reading cost and bidding according to customer acquisition cost. When placing an ad, you can determine the appropriate placement strategy based on these two bidding methods.

Q7: How to understand the reading conversion rate and calculate the daily and total reading conversion rate?

A: The reading conversion rate refers to the proportion of effective traffic brought by reading, based on the total number of readings. Usually, the reading conversion rate is calculated on a monthly basis, and the increment brought by reading on the same day can also be calculated. The specific calculation method is to divide the total number of readings by the total number of traffic, so as to get the daily and total reading conversion rate.

Q8: Does high profit mean making money?

A: Although the public generally believes that high profits mean making money, in fact, it is necessary to understand it in conjunction with gross profit. Because gross profit reflects the profit level after the actual sale of the product, and profit is only a part of gross profit. For example, one of our members has a problem of high turnover but low net profit, because its gross profit is too low. Although the profit looks good, the actual net profit is limited. It may be that the income from working hard for a year is not as much as that from working, resulting in a situation where the boss is working for the employees.

Q9: How do you understand that doing business should be gradual and achieve repeated exposure by maximizing traffic?

A: When doing business, you should gradually increase traffic and achieve repeated exposure, rather than trying to directly increase conversion rates and production through a one-time large-scale release. Whether doing business or Xiaohongshu, it is a process of continuous testing, data collection, model building and data base points, and iterative optimization of strategies based on data!

Q10: How to reduce payment costs and increase conversion rates?

A: In order to reduce the paid cost, we need to pay attention to the factors that affect the click cost, including click-through rate and bid. By optimizing the cover material and improving interaction, we can effectively reduce the click cost. At the same time, when the high click-through rate is met, we need to further explore whether there is room for improvement in the conversion rate and whether there is a situation of customer loss to competitors.

02 Xiaohongshu data monitoring

Q11: If I want to divert content from Xiaohongshu to my private domain, is it more efficient to use paid content or operate a Xiaohongshu matrix account?

A: Take our data of "Nan Kaikou" on Xiaohongshu as an example. According to CPC calculation, the lowest bid is 0.1 yuan. When calculated by click-to-read method, the reading cost is also 0.1 yuan. If we hope to achieve 500,000 readings in a month on Xiaohongshu, and all this reading volume is obtained through paid placement, then the lowest cost is 50,000.

But in reality, we only need one employee to post less than 10 pieces of content on Xiaohongshu every day to reach 500,000 readings. The investment cost behind this is the employee's monthly salary of several thousand yuan.

By this calculation, operating content on Xiaohongshu ourselves is cheaper and more efficient than paying for traffic!

Q12: How is UV cost calculated?

A: When a user enters our store, the page visit brought by the user is counted as one UV. By analyzing the UV data, we can have a deeper understanding of the user behavior characteristics and the real users brought by our advertising on Xiaohongshu. (If the product is exposed on Xiaohongshu, but no users interested in the product are brought in, from the perspective of gaining traffic, we need to re-evaluate the current advertising strategy on Xiaohongshu. Why is there exposure but no accurate users!)

Q13: How to understand and calculate exposure numbers and reading numbers?

A: Exposure refers to the level of content that users see, while reading refers to users actually reading the content and staying for a period of time. The difference between the two is that reading requires users to not only see the content, but also read it. Exposure does not require further operations such as clicks, so reading should be less than or equal to exposure. At the same time, we can view specific exposure and reading data through background tools, further analyze the relationship between them and search data, and help us evaluate and judge the efficiency of delivery!

Q14: I tried paid advertising but the results were not good. Why did this happen?

A: The difference in content type and running volume logic leads to lower crowd accuracy when the running volume is large, and the production effect will also be reduced.

Q15: What is the reading cost of French fries? Does a low reading cost mean that the crowd will run away?

A: French fries have low reading costs and good results in the early stages of advertising. However, as the volume increases, the accuracy of the audience will gradually decrease, and the possibility of advertising failure will increase. At the same time, low reading costs do not necessarily mean good advertising results. It still depends on whether the target audience is accurately reached (interested in our products and willing to buy them).

03 Xiaohongshu operation skills

Q16: How to operate Xiaohongshu Mall well?

A: The operation of the mall is similar to that of Taobao. Currently, we only need to optimize the traffic of the main picture and product cards. The mall currently does not have a complicated product listing process.

Q17: What is the relationship between Xiaohongshu Mall operations and sales notes?

A: Trailer notes can be classified into the merchant section, because merchants can use trailer components to sell goods in the content of the influencer cooperation. It can also be classified into the mall section, because the mall is not directly related to the notes and only objectively displays products.

Q18: When doing competitive product analysis, which links should be considered? How to calculate traffic costs?

A: For competitive product analysis, we mainly use the analysis logic that we have shared with you in previous articles. In addition, everyone has their own competitive product analysis logic. We only provide a way of thinking, and you can improve and adjust it based on your own understanding and experience.

The traffic cost can be calculated through the cost of delivery and interaction data. The specific operation needs to combine the data of Dandelion backend and third-party tools (such as Qiangua or Huitun), and it is derived by comprehensively considering factors such as estimated price, total interaction volume and proportion of paid information flow.

Q19: Business Advisor has been revamped. When analyzing competitive products, you cannot see specific data, only data ranges. How can you solve this problem?

A: The data is in monthly intervals, but the general trend can still be seen by comparing the data intervals of different months, especially the fluctuation range of the data and the fluctuation range of the interaction volume on Xiaohongshu. It can be judged whether the precise traffic of competitors is brought by Xiaohongshu. Then, based on the time range of the fluctuation, it can be judged which content on Xiaohongshu is effective during this time period, and targeted tracing and analysis can be performed!

Q20: How to determine the advertising costs of competing products?

A: The advertising cost generally includes two parts: influencer fee + traffic cost. Through third-party data, you can estimate the reading volume and quotation of the other party's underwater notes and other cooperating influencers. Through Dandelion, you can see the cooperation fee of the water notes and calculate the traffic cost at the same time!

The above is some practical information on calculating the break-even point of Xiaohongshu. The amount of money spent on Xiaohongshu determines the available delivery methods and team combinations. The key point is how to increase traffic concentration and efficiency within a limited budget.