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What is the highest cost per order from ads I can afford before I start losing money?

Your ceiling is the profit you make on an average order before advertising: order value minus product cost, shipping and fees. If your CPA from ads is above that figure, every order the campaign brings loses you money. The calculator gives you the actual CPA from spend and orders; you compare it with that ceiling.

Published · 3 min read

Step one: set the ceiling from your profit

Say your average order is 150 AED, and product cost plus shipping and payment fees come to 105. Enter both in the Profit margin calculator and it shows a profit of 45 per order, a 30% margin. That 45 is everything you can pay the ads for one order and still break even. Every dirham above it comes out of your pocket.

The ceiling comes from profit, not from the selling price. A common slip is thinking: my product sells for 150, so a CPA of 50 is cheap. It is cheap next to the price, but it is more than the profit.

Step two: work out the real CPA

Your campaign was shown 25,000 times and got 500 clicks for a spend of 2,000 AED, with 40 orders. Enter it in the Campaign performance calculator:

Worked example

40 orders: CPA = 2,000 ÷ 40 = 50, five over the 45 ceiling on every order.

44 orders: CPA 45.4545, still above the ceiling.

45 orders: CPA 44.4444, under the ceiling for the first time.

48 orders: CPA 41.6667, a clear margin of safety.

On the same spend, the gap between losing and breaking even is just five orders. That is why improving what happens after the click, a clearer page or faster shipping, can be cheaper than cutting ad costs.

Using the ceiling in day-to-day decisions

  1. Set the ceiling once per product or category with its own margin, and write it next to the campaign name.
  2. Each week, enter the campaign's figures in the calculator and read CPA.
  3. Comfortably below the ceiling, the campaign earns on every order. Close to it or above, review the ad, the page or the price.
  4. When order values vary a lot, use the ROAS calculator, which works with sales value rather than order count.

What this calculation leaves out

  • Repeat purchases: a customer who comes back and buys again without an ad may justify a higher CPA on the first order. That is a business judgement for you to make; the calculator does not estimate it.
  • Fixed costs such as rent and salaries: the ceiling stops you losing on each order, but it does not guarantee the month is profitable.
  • Returns and cancelled orders: if there are many, subtract them from orders before entering them.

Common questions

Is the ceiling the same for all my products?

Only if profit per order is similar. A low-margin product can bear a much lower CPA than a high-margin one.

The campaign is new and has brought two orders. Should I compare with the ceiling?

Carefully. With so few orders, one more or one less moves the figure a lot, so wait for enough orders to build up before pausing or doubling the campaign.