Ads can bring orders and still lose money. The question is not how many messages an ad brings, it is how much you can pay for one order before the profit is gone.
This calculator takes your selling price and costs, adds the effect of refused orders, and tells you the most you can pay in ads for each order placed. Use it before you set a budget, not after.
How it works
- Profit before ads = selling price − product cost − delivery − fees − other costs.
- Average profit before ads per order placed = (share delivered × profit before ads) − (share refused × cost of one refused order).
- That average is the most you can pay in ads for each order placed and still break even.
- Break-even return on ad spend = sales value brought in per order placed ÷ the most you can spend on ads.
A worked example
Example numbers only: price Rs 1,800, total costs Rs 1,420, so Rs 380 profit before ads. If 20 in 100 orders are refused and a refused order costs Rs 280, the average profit before ads is about Rs 248 per order placed.
So paying more than about Rs 248 in ads for each order placed means you lose money on average. Paying Rs 150 leaves about Rs 98 per order.
Common questions
Is the ad cost per message or per order?
Per order placed. Many messages never become orders, so divide your ad spend by the number of orders you actually placed, not by the number of messages.
Should I count refused orders?
Yes. An ad that brings an order that's refused still cost you the ad money and the delivery trip.
What if the result says there is no room for ads?
Then at these numbers the product loses money before any ad is bought. Raise the price, lower a cost or choose another product before you advertise.
Do ad platforms have rules I should read?
Yes. Every ad network has policies on what you may advertise and how. Read them before you pay for an ad.