Start with what you keep
A sale is not all yours to spend. Take discounts and order costs away first. What is left can pay for ads and then the rest of your business.
KNOW YOUR NUMBERS BEFORE YOU BUY THE CLICKS
More sales.
But are you making money?
A busy webshop can still lose money on every order. Before you run paid ads, find out what is left after the product, delivery and fees. That is your starting point for a sensible ad budget.
Find your break-even ROASFor DTC & CPG brands. No spreadsheet needed.
02 / SEE WHAT YOUR ADS NEED TO RETURN
Your order, in numbers.
Break-even ROAS1.44×
For every $1 spent on ads, you need $1.44 in sales after discounts to cover these costs.
Revenue after discounts
Product, delivery & other costs
Left before ad spend
Margin before ad spend
Ad spend per order at your ROAS
Left after ad spend
This is contribution per order, not final business profit. Rent, salaries, subscriptions and taxes are not included. Leave room for those before setting your ad target.
03 / WHAT SHOULD YOU DO WITH THIS NUMBER?
Follow the money. Then make your move.
Find your floor
Break-even ROAS is your starting line. It tells you how much revenue your ads need to bring back before these order costs and ad spend are covered.
Aim above it
At break-even, nothing is left for overhead or profit. Test an actual ROAS above your floor and check whether the money left is enough for your business.
Below your break-even ROAS
You are losing money on the order after ads. More orders at the same economics mean more loss. Check your costs, offer and ads before spending more.
At your break-even ROAS
The sale pays for the included costs and ads. There is no contribution left for overhead or profit yet.
Above your break-even ROAS
The order leaves money after ads. That is a positive contribution. Your business is profitable only when that also covers your remaining expenses.
Is a high break-even ROAS good?
A higher break-even number usually means a thinner margin and less room to pay for clicks. A lower break-even number gives you more room. That is different from your actual ROAS, where a higher return is generally better if the inputs are comparable.
Same order value. Different room for ads.
At a 25% margin before ads → you need 4.00× to break even.
At a 50% margin before ads → you need 2.00× to break even.
See the maths and assumptions
Revenue after discounts = order value − fixed discount − (order value × discount percentage ÷ 100).
Contribution before ads = revenue after discounts − product, payment, shipping, fulfillment, gift and other costs.
Break-even ROAS = revenue after discounts ÷ contribution before ads. Ad spend per order = revenue after discounts ÷ actual ROAS. Money left after ads = contribution before ads − ad spend.
If your contribution is zero or negative, no finite ROAS can make this order profitable. Improve the margin first. This model considers the first order only and does not assume repeat purchases.
Compare against a ROAS figure that uses the same revenue basis. Different attribution windows, refunds and tax treatment can change the comparison. Read more about break-even ROAS ↗
THE BUSINESS BEHIND EACH ORDER
What are unit economics?
Unit economics means looking at the money earned and spent on one unit of your business. For this calculator, that unit is an average order. How much does the customer pay, what does it cost to deliver that order, and what is left after you pay to win the customer?
It helps answer a simple question: if you sell more at the same costs, will your business have more money left, or a bigger loss?
A clothing brand, one order at a time.
| Customer pays | $60 |
|---|---|
| Clothing production cost | − $18 |
| Shipping | − $5 |
| Packing & fulfillment | − $3 |
| Payment fees | − $2 |
| Average allowance for returns | − $2 |
| Left before ads | $30 / 50% |
| Ad cost to get this order | − $20 |
| Left after ads | $10 |
How an owner uses these numbers.
The break-even ROAS is $60 ÷ $30 = 2.00×. At an ad cost of $20, actual ROAS is $60 ÷ $20 = 3.00×. That leaves $10 per order for overhead and profit.
- Set a target with room to breathe. If the owner allocates $6 per order to overhead and wants $4 left, the ad budget is $20 per order. That means a 3.00× ROAS target, above the 2.00× break-even floor.
- Check what actually happened. Compare actual delivery, returns and ad costs with the plan. A bigger discount or more returns can use up that $10 quickly.
- Fix the margin before scaling. Test pricing, bundles or lower fulfillment costs, then recalculate. Increase ad spend only while the orders still leave enough money to support the business.
This is an example, not a result from a named brand or a guarantee of success. A health-food brand can use the same approach, including ingredients, packaging, delivery and spoilage. Count repeat purchases when you have evidence for them, not just a hope that customers will return.
Know the number. Now check the bigger picture.
Review your brand and tracking before your next campaign.