Break-even CPA calculator

Break-even CPA is the margin an average order leaves after product cost, payment fees, shipping and returns: pay more than that per purchase and every order loses money. Compare it with the cost per purchase in Ads Manager, which counts orders when they're placed, returned ones included.

Break-even cost per purchase: $19.60
Target cost per purchase: $14.60
Break-even ROAS: 2.55x

Connect your store and Tera Ads shows your real profit after ads and returnsFree for one business, no card needed.

The formula

Margin on a kept order = order value × (1 − product cost − payment fees) − shipping
Break-even CPA = kept share × margin on a kept order − return rate × (shipping + return shipping)
Target CPA = break-even CPA − profit to keep per order

Rates are shares between 0 and 1: 30% is 0.3. Returned products are assumed to go back into stock.

Worked example

Orders average $50. Product cost is 40% of that and payment fees 2%.

Shipping costs $3 each way, and 20% of orders come back.

You want each order to leave $5 after its ads.

The average order leaves $19.60 after returns, so ads break even at $19.60 per purchase, the same as a ROAS of 2.55x. To keep $5, aim for $14.60 or less.

Questions

Is CPA the same as cost per purchase in Ads Manager?

For a store, yes: Meta's cost per purchase is ad spend divided by the purchases it gives its ads credit for. It counts orders when they're placed, so compare it with this break-even, which already allows for returns.

Why does my CPA look fine while I'm losing money?

Usually returns or margin. A returned order still counts as a purchase in Ads Manager, and if product cost or shipping has gone up, an old target is too high. Check the break-even again whenever costs change.

Must the first order cover the whole CPA?

Not always. Brands with strong repeat buying sometimes accept a loss on the first order and earn it back later. Check how long that takes with the CAC payback calculator before you rely on it.

Should I enter order value with or without sales tax or VAT?

Use order value after the tax is taken out, because it isn't yours to keep. Counting it makes every ROAS look better than it is. Keep product cost, fees and ad spend on the same basis.

The full guide

D2C Unit Economics Template: Profit Per Order and Per CustomerUnit economics show what one order and one customer earn after product, shipping, returns and ad costs. A simple template for D2C brands, with a worked example.