Know your break-even.
Set a better target.
Find the return your advertising needs to cover its cost, then allow for the profit you want to keep.
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Your unit economics
Uses gross margin and ignores fixed costs, shipping and returns unless you have already included them in your margin figure.
First-order targets
Break-even ROAS
Target ROAS
Break-even CAC
Target CAC
At break-even, all gross profit pays for advertising. Nothing remains for fixed costs or net profit.
With repeat purchases
Depends on your own repeat-rate assumption. Future purchases are not guaranteed, and their cash arrives later.
Break-even acquisition ROAS including repeat purchases
This is first-order revenue divided by acquisition spend, supported by lifetime gross profit. Lifetime revenue ÷ acquisition spend still breaks even at 1 ÷ gross margin.
What €100 of ad spend could return
First-order results at your entered gross margin, before fixed costs.
| ROAS | Revenue | Gross profit | After ads |
|---|
How to read your results
ROAS measures revenue
A 2× ROAS means €2 of revenue per €1 of ad spend. It does not mean €2 of profit. Your gross margin determines how much is left to pay for advertising.
Define the profit target
This calculator retains a chosen share of gross profit. At 60% gross margin and 30% retained, 42% of revenue can fund ads and 18% remains before fixed costs.
Treat repeats as an assumption
The repeat-adjusted threshold can support a higher acquisition cost. Use your own customer purchase history and consider cash flow before spending against future orders.
Put your plan into practice
Talk through your tracking, acquisition costs and next campaign with Prosperus Digital.