How to Calculate Break-Even CPA
Break-even CPA is the most you can pay for one sale before ads start losing money. It takes two numbers and one multiplication.
What CPA means
Cost per acquisition (CPA) is what you pay in ad spend to win one customer or sale. In Google Ads you will also see it as "cost per conversion".
The break-even formula
Each sale leaves you some profit before ads. If the ad cost for that sale is higher than that profit, you lose money on it. So your break-even CPA is simply your profit per sale.
Use the margin left after product cost, shipping and payment fees, but before ad spend. For a service business, use the profit on a typical job in place of order value times margin.
A worked example
Example store
- Average order value
- 120
- Profit margin before ads
- 35%
- Break-even CPA
- 42.00
- Your actual CPA
- 30.00
- Profit per sale after ads
- 12.00
This store can pay up to 42 for a sale. At an actual CPA of 30 it keeps 12 on each one. If CPA drifts above 42, every extra sale costs money.
Turn it into a maximum CPC
You pay per click, not per sale, so convert the limit into a click price. Multiply break-even CPA by your conversion rate.
With a 42 break-even CPA and a 3% conversion rate, the highest CPC you can afford is 42 × 0.03 = 1.26. Bid above that on average and the campaign loses money.
| Conversion rate | Max CPC at 42 break-even CPA |
|---|---|
| 1% | 0.42 |
| 2% | 0.84 |
| 3% | 1.26 |
| 5% | 2.10 |
| 8% | 3.36 |
Common mistakes
- Using revenue instead of profit. Break-even CPA uses profit per sale, not the sale price.
- Ignoring repeat customers. If buyers return, you can accept a higher first-order CPA. Add the profit from later orders to the first one.
- Forgetting fees. Payment processing, returns and shipping all belong in your margin.
- Mixing campaigns. Products with different margins need different CPA targets.
Check your own numbers
Enter your order value, margin, CPC and conversion rate into the Google Ads ROAS & Break-Even Calculator. It shows break-even CPA, break-even CPC and monthly profit at once.
Related reading: What Is a Good ROAS? and Average CPC by Industry.