Break-even
Measurement and data
Measurement and data
Break-even is the point where revenue and costs are equal. In advertising you translate that into a break-even ROAS or a maximum cost per order.
Break-even ROAS is 1 divided by your gross margin: at 40% margin that's 2.5. Below it, a sale costs you money.
Factor in repeat purchases if you have them. If you count a year of customer value, you can deliberately run below break-even on the first order.
Related terms
- ROIROI is the return on an investment: revenue minus cost, divided by cost. In marketing you should work from margin, not revenue.
- ROASROAS is revenue generated by your ads divided by what you spend on them. A ROAS of 4 means €4 revenue per euro spent.
- Customer acquisition costCAC is the total cost of winning one new customer: ad spend plus the people, tools and hours involved.