Factors in product cost to show how much you can spend on ads before you lose money.
This calculator only works with the amounts you enter. It does not set or look up platform fee rates, ad attribution windows, or tax refunds for you.
What to have ready before calculating
Revenue for the same period and the same product. Decide whether it is net of cancellations and refunds.
The matching cost of goods, selling fees, shipping and packaging for that revenue.
The ad spend actually spent in the same period.
The fixed costs you decided to allocate to this scope. You have to choose the allocation basis yourself.
Whether the figures include or exclude VAT. Do not mix the two between revenue and costs.
Please check your entries
Scope and amounts
Noting which product and which period keeps the copied result from getting mixed up later. It is not used in the calculation.
Enter a whole number in USD. Decide first whether it is net of cancellations and refunds, then use the same basis for the costs below.
The sum of costs that grow with sales, such as cost of goods, selling fees, shipping and packaging. If the same shipping cost is already inside your cost of goods, entering it here counts it twice.
You can enter 0. With 0, the ad spend to revenue ratio is not calculated.
The share of costs unrelated to sales, such as rent or salaries, that you decided to assign to this scope. You set the allocation basis yourself, and leaving it blank does not silently make it 0.
The amount you want left after fixed costs. It is used to work backwards to the revenue you need. This is not after-tax net profit.
Mismatched bases throw the result well off. Tick this only if you checked it yourself. Nothing is calculated until you do.
Nothing calculated yet. Enter the amounts and press Calculate ad profit.
Your entries changed. Calculate again.
Results
Contribution margin
Contribution margin before ads
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Revenue minus non-ad variable costs.
Contribution margin after ads
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The figure above with ad spend also taken out.
Amount left after allocated fixed costs
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The figure with allocated fixed costs also taken out. This is not after-tax net profit.
Ratios and break-even
Contribution margin ratio
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Contribution margin before ads as a share of revenue. Not calculated when revenue is 0.
Entered revenue divided by ad spend
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Your total revenue divided by your ad spend. This is not the same figure as the ROAS an ad platform reports for revenue it attributes to itself.
Break-even ROAS on ads
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The inverse of the contribution margin ratio. It excludes fixed costs and shows the revenue each unit of ad spend has to bring in to pay for itself.
Target revenue
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The revenue needed to cover ad spend, fixed costs and your target remaining profit. It answers a different question than break-even ROAS.
What this result assumes
Working back to target revenue assumes your current variable cost ratio stays the same.
Tax refunds and statutory net profit are not included. This is not net profit, after-tax profit, or total business profit.
Inventory build-up, fee tier changes and shifts in ad efficiency are not part of the formula.
Confirming that the amounts share the same period, product and tax basis is your call, not the calculator's.
How it is calculated
The steps below are used in order. Every amount comes from you, and nothing is looked up automatically.
Contribution margin before ads = revenue − non-ad variable costs
Contribution margin after ads = contribution margin before ads − ad spend
Amount left after allocated fixed costs = contribution margin after ads − allocated fixed costs
Contribution margin ratio = contribution margin before ads ÷ revenue
Break-even ROAS on ads = 1 ÷ contribution margin ratio
Target revenue = (ad spend + allocated fixed costs + target remaining profit) ÷ contribution margin ratio, rounded up
Break-even ROAS is measured on contribution margin, before fixed costs, while target revenue also covers fixed costs and your target profit. They answer different questions, so it is normal for the two to differ.
Worked example
A made-up example for checking the screen. It is not a real market rate or the terms of any particular marketplace.
Contribution margin before ads $1,200,000, after ads $600,000, after fixed costs $500,000
Contribution margin ratio 40%, entered revenue divided by ad spend 5×
Break-even ROAS on ads 2.5×, target revenue $2,500,000
Frequently asked questions
Can I compare the ROAS here directly with the ROAS on my ad platform dashboard?
No, not directly. The ratio here uses the total revenue you entered, while the ad platform counts only the revenue attributed to its own ads. The numerators are different.
Are there cases where no break-even ROAS comes out?
Yes. If the contribution margin ratio is 0 or below, you are not even recovering variable costs without advertising, so no finite break-even ratio exists. In that case look at your costs and price before spending more on ads.
Is this remaining amount my net profit?
No. Taxes and any costs you left out of this scope are missing. The allocated fixed costs are also just the basis you chose.
How do I handle VAT?
Include it or exclude it, but use one basis consistently for revenue and costs. The calculator cannot tell which one you used and does not convert between them.
What this calculator does not do
It does not set platform fee rates or ad attribution windows for you.
It does not forecast return rates or build return scenarios.
It does not compare several products at once. It works on one product for one period.
It does not connect to your ad account to pull in performance data.
It does not calculate tax refunds or statutory net profit.
Related calculators
If you only want a quick look at revenue against ad spend without factoring in product cost, the existing calculator is simpler.
Marketing ROI & ROAS Calculator
— Calculates ROI, ROAS and customer lifetime value from revenue and ad spend alone. Product cost is not entered.
Split Bill Calculator
— For when you need to divide an amount among a number of people.