Breakeven ad spend calculator
See the most you can afford to spend acquiring a customer through ads — using your real average order value, margin, and profit target.
Enter your average order value, your gross margin after fulfillment costs, and the profit margin you want to keep. The calculator works out your maximum affordable cost per acquisition and the breakeven ROAS it implies.
Breakeven ad spend calculator inputs and results
How this calculator works
Gross profit per order — average order value multiplied by gross margin — is the most you could ever spend acquiring that order and still come out even. If you want to keep some of that as actual profit rather than spending all of it on ads, the dollar value of your target profit margin is subtracted first. What remains is your maximum affordable cost per acquisition.
Breakeven ROAS is the same relationship expressed as a ratio instead of a dollar figure: average order value divided by maximum affordable ad spend. It's useful for checking against the ROAS figures most ad platforms report directly, rather than converting every campaign's spend back into a per-order dollar amount yourself.
About this tool
This tool is a free calculator. Inputs: average order value (AOV), gross margin % (after COGS, shipping, and payment processing), target profit margin %. Output: maximum affordable cost per acquisition (CPA), and the breakeven return on ad spend (ROAS) that corresponds to it. Formula basis: gross profit per order minus the dollar value of your target profit margin, both calculated from AOV.
Frequently asked questions
How is maximum affordable ad spend calculated?
Gross profit per order is your average order value multiplied by your gross margin. From that, the dollar value of your target profit margin is subtracted, since that portion needs to stay as actual profit rather than being spent on acquisition. What's left is the most you can spend on ads per order and still hit your target.
What's the difference between breakeven ROAS and target ROAS?
Breakeven ROAS is the return on ad spend at which you make exactly zero profit after costs — spending more than that loses money, spending less leaves profit on the table relative to what you could afford. Most businesses set a target ROAS above breakeven specifically to build in a profit margin, which is what the target profit margin field controls here.
Should I use gross margin or just my product margin?
Use gross margin after all variable costs tied to fulfilling an order — cost of goods, shipping, and payment processing — not just product cost. Ad spend has to be recovered from what's actually left after every cost that scales with each sale, not from revenue or product margin alone.
What if the result is negative?
A negative result means your target profit margin is higher than what your gross margin can support at any level of ad spend — there's no amount you could spend on ads, including zero, that would hit that target. Lower the target profit margin or improve your gross margin before relying on paid acquisition.