4 sales in a thousand visits - should Dave be worried?

Dave needs 10 sales out of every 1,000 visitors to be profitable. He runs a test and gets 12 sales. How can he be 95% sure that this isn't just good luck, and that the site will continue to be profitable?

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Profitable conversion rate = 10 / 1000
Profitable conversion rate = 1%


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Using the laws of Expected Value, we would expect:

Number of expected sales = Visit x Per-Unique-User-Conversion-Rate

We know the visits. Dave's profitable conversion rate is 1%.



Number of sales to be profitable  = 1,000 x 1%
Number of  sales to be profitable  = 10


Now this could be good, or it could be bad. Dave gets 4 sales for 1,000 visitors, should he be worried about this profit?

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No. Dave is cool - 4 could still be profitable. 




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