Ecommerce Profit and Break-Even ROAS Calculator Australia

Why platform ROAS is not profit

Advertising platforms divide attributed revenue by ad spend. They do not subtract GST, landed product cost, outbound shipping, fulfilment, payment fees, discounts, refunds or the operational cost of returns. A reported 3.0x ROAS can be profitable for one product and loss-making for another.

This calculator starts with the cash paid by the customer, removes the GST component, then calculates contribution before and after acquisition cost. That produces a break-even CAC and ROAS grounded in the order’s actual economics.

How expected returns are modelled

The return rate is converted into an expected cost per order. It includes the sales value lost on refunded orders plus the entered average handling loss. That handling figure can cover non-refundable shipping, reverse logistics, damaged packaging, cleaning, write-downs and payment fees that are not recovered.

Break-even ROAS versus target ROAS

Break-even ROAS is the revenue multiple at which expected contribution reaches zero after the costs entered. Target-profit ROAS is stricter: it reduces the maximum CAC until the chosen profit per order remains.

Neither metric covers fixed overhead unless those costs are built into the target profit or analysed separately. A business needs enough total contribution each month to cover software, wages, rent, creative production, professional fees and owner remuneration.

Repeat-order value

Expected repeat contribution can justify a higher first-order CAC, but only when supported by cohort data. Do not enter lifetime revenue. Enter the expected future contribution after product costs, fulfilment and servicing, adjusted for the percentage of customers who actually return.

Checks before increasing ad spend

• Use net selling price after the normal discount, not the full RRP.
• Update product and shipping costs when suppliers or carriers change.
• Measure refunds and exchanges by product and acquisition channel.
• Separate contribution profit from net business profit.
• Compare platform attribution with store and payment data.

Start with contribution profit, not revenue

Contribution profit is the amount left from an order after the variable costs required to generate and fulfil that order. In this calculator, GST is removed from customer revenue, then landed product cost, outbound shipping, fulfilment, payment fees, expected return losses and customer acquisition cost are deducted. Fixed overheads and income tax are outside the order-level result.

A store can report strong revenue and still lose cash on each first order. The calculator makes that visible before platform ROAS or gross margin creates a false sense of profitability.

How GST changes the revenue available

A GST-inclusive selling price is not all business revenue when the sale is taxable. The calculator removes GST after the entered discount so costs are compared with GST-exclusive revenue. Input-tax credits and detailed BAS treatment are not modelled; use landed and operating costs consistently with the accounting basis used in the business.

For a $99 GST-inclusive sale, revenue excluding 10% GST is $90 before discounts and other costs. A 10% discount reduces the customer payment first, so the ex-GST amount is lower again.

Returns must be priced as an expected order cost

Returns affect profit through more than the refund. The business can lose outbound shipping, return postage, payment fees, packaging, handling time and product value when an item cannot be resold at full price. Enter the average unrecovered loss per returned order and multiply it by the expected return rate.

Use actual return data by product and acquisition channel where possible. A store-wide average can hide a product with fit, quality or expectation problems. Run a stress case several percentage points above the recent rate.

Payment and fulfilment fees

Payment costs often contain both a percentage and a fixed amount. The percentage usually applies to the customer payment after discount, while the fixed fee matters more on low-priced orders. Buy-now-pay-later, international cards and platform arrangements can have different rates, so model the method that represents the expected order mix.

Fulfilment should include pick-and-pack, packaging and any per-order warehouse or app charge. Landed product cost should include the cost required to get inventory ready for sale, not only the supplier’s item price.

Break-even ROAS and profitable ROAS

Break-even ROAS is advertising revenue divided by the maximum acquisition cost the first order can support before contribution profit reaches zero. A target-profit ROAS is higher because the permitted acquisition cost is reduced by the desired profit per order. Platform ROAS is not net profit and may use attributed revenue that differs from store revenue.

If an order creates $35 before advertising, the break-even CAC is $35. On $90 of ex-GST revenue, break-even ROAS is about 2.57. Requiring $15 contribution profit lowers allowable CAC to $20 and lifts target ROAS to 4.5.

Discounts create a double hit

A discount reduces revenue while many costs stay fixed. Product cost, shipping, fulfilment and the fixed payment fee do not fall by the discount percentage. This is why a 20% promotion can reduce contribution profit by much more than 20%.

Run the calculator at full price, the normal promotional price and the deepest planned discount. If the discounted order only works with unrealistically cheap acquisition, the promotion needs a higher basket value, lower cost, product bundle or tighter audience.

Repeat purchases should not rescue a broken first order without evidence

The repeat-value field can include expected future contribution from the acquired customer, but it should be based on cohort data after repeat fulfilment, returns and retention costs. Do not use total lifetime revenue. A speculative lifetime-value assumption can justify almost any current loss.

Run the first-order economics with repeat value set to zero. Then add a conservative measured amount. The difference shows how dependent the acquisition strategy is on retention.

Use three channel cases

1. Use blended store data to establish the overall contribution baseline.
2. Run each major paid channel with its actual CAC, discount and return rate.
3. Run a stress case with higher returns and acquisition cost at the same selling price.

Keep fixed overheads in a separate monthly break-even model. Positive contribution profit means an order helps pay fixed costs; it does not prove the business is net profitable.

Limits of the calculation

The tool does not allocate salaries, rent, software subscriptions, inventory write-offs, tax, chargebacks or working-capital costs unless entered as an order-level cost. Attribution can also overstate incremental sales. Reconcile calculator assumptions with Shopify, payment-provider, fulfilment and accounting reports before changing budgets.

Official sources and review notes

This calculator is general information. The calculations use the assumptions shown on the page and do not determine legal status, eligibility, tax outcomes, lending approval or financial-product suitability.

• ATO — Registering for GST — Current GST registration threshold and obligations.
• ATO — How Australian GST works — Official overview of Australian GST.

Related calculators and guides

• Small Business CalculatorsBrowse related Australian decision tools.
• Break-Even ROAS vs Profitable ROASCalculate the ad-spend threshold that covers variable costs and the stricter ROAS needed to fund overhead and profit.
• Ecommerce Contribution Margin ExplainedMeasure the money each order contributes after variable costs but before fixed overhead.
• How GST Affects Ecommerce Profit in AustraliaRemove GST correctly from customer revenue and avoid overstating margins, CAC limits and ROAS.
• How Returns Change Your Real Customer Acquisition CostInclude refund rate, reverse logistics and lost product value when judging ecommerce advertising.
• How to Price Products When Discounts Are ExpectedSet an Australian ecommerce price that remains viable after normal promotions, GST, fees and returns.
• Gross Margin vs Net Profit in EcommerceUnderstand the layers between product margin, contribution after ads and final business profit.

Frequently asked questions