This calculator estimates the highest advertising CPA a product can sustain before contribution profit reaches zero, together with the corresponding break-even ROAS.
How it works
Expected revenue is first adjusted for returns or refunds. Product, shipping, handling, platform, payment and expected return costs are then deducted. The remaining contribution before advertising becomes the theoretical acquisition-cost ceiling.
The formula
CPA is advertising cost per acquired order. ROAS is revenue divided by advertising spend. A higher break-even ROAS means less room for acquisition cost relative to revenue.
Worked example
With the default values, expected revenue is 135 per order, contribution before ads is 46.725, maximum CPA is 46.725 and break-even ROAS is about 2.89x. At a current CPA of 25, estimated profit is 21.725 per order.
This is a planning model. Actual attribution, platform fees, refunds, taxes, discounts and advertising measurement can differ by channel.
Frequently asked questions
What does maximum CPA mean?
It is the highest acquisition cost per order that leaves contribution profit at approximately zero under the assumptions entered.
Should my target ROAS equal the break-even ROAS?
Break-even is only the zero-profit boundary for the modeled contribution. A business normally needs additional room for overhead, taxes, uncertainty and desired profit.