Break-Even ROAS Calculator

Contribution margin before advertising: Use revenue less the variable costs agreed with finance, expressed as a percentage of that same revenue. Exclude the advertising spend being tested from this margin to avoid counting it twice. Gross margin is not automatically the same measure.

Formula: 1 / (Contribution Margin % / 100). At a 25% pre-ad contribution margin, the model gives 1 / 0.25 = 4.00× ROAS.

Derivation: advertising spend equals revenue multiplied by the pre-ad contribution margin at this threshold. Revenue divided by advertising spend therefore equals the reciprocal of that margin. Keep the currency, revenue basis and reporting scope consistent.

This is the threshold where modelled contribution covers advertising spend. Above it, contribution remaining after advertising is positive within the stated cost boundary. Fixed overhead, financing, taxes and omitted acquisition costs can still change the business result. The calculation does not establish net profit, cash recovery or incremental sales.

Check which revenue the ROAS numerator represents. A property contract value, recognised revenue and collected cash are different measures. A margin based on one cannot be applied automatically to a ROAS based on another.

At a 20% pre-ad contribution margin and 3.00× ROAS, a hypothetical 100 EGP of advertising corresponds to 300 EGP of revenue and 60 EGP of contribution before advertising. The modelled shortfall is 40 EGP: 40% of advertising spend, or about 13.33% of revenue. It is not a 40% loss on every customer.

Agree the cost boundary with finance before setting a budget or performance target. Review acquisition costs and payback when timing and collections matter.

ACCA: cost-volume-profit analysis explains contribution and the role of fixed costs in business break-even. The advertising threshold above is a derivation under the stated model, not an ACCA property-market benchmark.