Ad economics calculator
There are two different questions before a launch, and they get confused constantly. First: how much can I afford to pay for a customer at all. Second: what happens if I put this much in. The first has an exact answer before a penny is spent. The second is always an assumption, and it is honest to call it a projection rather than a promise.
Works out the line above which advertising starts losing money. This can be known before launch.
A projection from your own assumptions: what happens if the funnel performs exactly like this.
This is arithmetic on your own assumptions, not a forecast of results. Nobody knows the real cost per click or conversion rate before launch: they depend on the auction, competitors and season.
Nothing is sent anywhere: the numbers are computed in your browser and stored nowhere.
Why two modes
The first mode works backwards, from your economics to a ceiling. That ceiling has nothing to do with advertising: it is set by your order value, your margin and how many leads reach payment. It can and should be known before launch.
The second works forwards, from budget to profit. It is useful for seeing the order of magnitude and whether the problem has a solution at all. But every number in it is your assumption, not a forecast.
What the second mode shows that others hide
Profit is calculated after the management fee, not just the ad spend. That changes the picture more than people expect.
Spend 1000, revenue 1250, ROAS 1.25. Looks positive. But at a 30 percent margin the gross profit is 375, while total costs including management are 1600. The actual outcome is minus 1225, with a ROAS above one.
This is why ROAS means nothing without margin. Alongside it the calculator shows break-even ROAS: 3.33 at a 30 percent margin, 1.67 at 60 percent. Below that line advertising loses money no matter how healthy the ROAS looks.
What to do with the result
- Comfortable margin: there is room to scale the budget.
- Only just works: leave the budget alone and work on close rate and order value. Both raise the ceiling without extra spend.
- Does not work: more budget makes it worse. Start with order value, conversion or the offer.
More on the approach: unit economics. If you want me to look at your real numbers, there is a free thirty-minute review.
FAQ
Why does it not tell me how many leads I will get?
Because nobody honestly knows before launch. The second mode shows what follows from your assumptions about cost per click and conversion, but those assumptions still have to be tested. A calculator promising an exact lead count is selling confidence, not arithmetic.
Why include the management fee?
Because it is real money coming out of the same profit. A calculator that shows only ROAS and stays quiet about the cost of management systematically paints a better picture than reality.
What is break-even ROAS?
The ROAS at which gross profit equals ad spend. It is one divided by your margin: at a 40 percent margin that is 2.5. Anything below loses money.
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