How much can I spend on ads per order and still make a profit?

Step one: know the profit per order before ads

In the Profit margin calculator, enter the product cost including packaging, any shipping you absorb and payment fees, and the selling price before tax.

Note that the ceiling is an amount, not a percentage. Ad platforms report cost per purchase or per acquisition in currency, so you can compare the two figures directly.

Step two: add your actual ad cost

From your campaign report, divide what you spent by the number of orders it brought. Spend 900 and get 50 orders, and the cost per order is 18. You can work it out alongside the other campaign metrics with the Campaign performance calculator.

Add 18 to the cost in the margin calculator and keep the price at 100:

Do not run close to the ceiling

If cost per order rises to 30, the cost becomes 100 and the calculator tells you price equals cost: no profit, no loss. At 27 you keep 3 and a 3% margin, which will not survive one returned order or a week when ad prices jump. Set yourself a working ceiling below the theoretical one and keep part of the profit for yourself.

The same idea as return on ad spend

You can read the same limit as ROAS. A 30% margin before ads means a campaign needs a ROAS of at least 3.33 to break even. The campaign in the example spent 900 and brought 5000 in sales, a ROAS of about 5.56, with 600 profit after ads. Enter the same figures with the margin in the ROAS calculator to get these results directly.

• If your ROAS is below break-even, the campaign loses money however busy sales look.
• Each product has a different margin and so a different ceiling. Do not use one ceiling for the whole store.
• If customers come back and buy again without ads, you may accept a higher ceiling on the first order, but base that on your data, not on hope.