Know your real margins before you scale ads: break-even ROAS, contribution margin, and inventory-cash tools for online sellers.
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E-commerce brands scale themselves broke by pouring ad spend into products that don’t have the margin to support it. NerdyGirl University makes the unit economics obvious before you turn up the budget.
Break-even ROAS is 1 ÷ contribution margin. If your product’s contribution margin is 40%, you break even at a 2.5x ROAS — spend past that only if the number holds. The Margin & Break-Even ROAS Calculator computes true net margin after COGS, fees, and shipping, then shows the exact ROAS and max CAC you can afford.
Contribution margin — revenue minus all variable costs (product, payment fees, fulfillment, shipping, returns) — is the number that funds ads, overhead, and profit. Most sellers overstate margin by forgetting fees and returns. Our COGS and Unit Economics tools force every variable cost into the calculation.
Inventory is cash you can’t spend. Reorder too early and you starve ad budget; too late and you stock out during your best window. The Inventory & Cash-Flow tools model reorder timing, dead-stock cleanup, and the cash tied up in stock so growth doesn’t create a cash crisis.
Break-even ROAS equals 1 divided by your contribution margin. At a 40% margin you break even at 2.5x; at 50% margin, 2.0x. Your target ROAS must sit above break-even by enough to cover overhead and profit — the Margin & Break-Even ROAS Calculator gives you the exact figure for your product.
Take selling price and subtract every variable cost: product/COGS, payment processing fees, fulfillment and shipping, and expected returns. What remains — the contribution margin — is what’s available to fund advertising, overhead, and profit.
For a one-time purchase, max CAC is roughly your contribution margin per order (spend more and you lose money on the first sale). If you have repeat purchases, you can afford a higher CAC based on customer lifetime value. The unit-economics tools model both cases.
Enough to cover lead time plus a safety buffer without over-ordering into dead stock. Model reorder points from sales velocity and supplier lead time; the Inventory & Cash-Flow tools show the cash tied up at each reorder quantity.