The formula
rate = (followers × reach ÷ 1,000) × CPM × engagement adjustment
What it means
The industry runs on CPM, what an advertiser pays per thousand impressions. The rate comes from the expected reach — followers times the share that actually sees each post — and is adjusted by engagement, because an account with an awake audience delivers more value per impression than one with the same follower count asleep.
How to work it out by hand
- Multiply your followers by your average reach: those are the impressions
- Divide by a thousand and multiply by the CPM: that is the base rate
- Adjust for your engagement, taking 3% as the average
- Multiply by the number of posts in the deal
What is worth knowing
The CPM is a field because there is no single market price: it changes by country, by niche — finance and tech pay far more than entertainment — by format and by season, and it climbs in November. What is worth being clear about when negotiating is that the advertiser looks at cost per interaction and per result, not at follower count, and that exclusivity, usage rights over the content and permission to run it as paid advertising are charged separately: they are what pushes a deal's price up most and what gets forgotten most often.