Ad Budget Planner
Table of Contents
- What the Ad Budget Planner calculates
- How it works (simple, practical math)
- What to enter (and how to avoid bad assumptions)
- Basic vs Advanced mode (when to use which)
- How to interpret the results (with real-world guidance)
- Practical tips to improve your plan (and hit ROAS targets)
- Related calculators
- FAQ
- How much should I spend on ads to make my revenue goal?
- What is a good ROAS for ecommerce?
- Why does conversion rate matter for ad budget planning?
- What if my target ROAS is close to my break-even ROAS?
- Does the Advanced mode make the plan more accurate?
- How can I translate ROAS into a maximum CPA?
The Ad Budget Planner helps you reverse-engineer your advertising plan from a revenue goal. Enter your target revenue, AOV, conversion rate, and target ROAS to instantly see the required ad spend, required conversions, and required traffic.
What the Ad Budget Planner calculates
| Output | Meaning | Why it matters |
|---|---|---|
| Required Ad Spend | Total budget needed to hit your revenue goal at your target ROAS. | Prevents under-budgeting (missing targets) or over-budgeting (wasting spend). |
| Required Conversions | Number of orders needed to reach your revenue target. | Turns “$ revenue goal” into an operational KPI you can manage. |
| Required Traffic | Number of visits/clicks needed at your current conversion rate. | Shows whether your plan requires realistic traffic volume. |
| Break-even ROAS (advanced insights) | The minimum ROAS required to avoid losses. | Helps you judge if your target ROAS is safe or fragile. |
How it works (simple, practical math)
The planner uses standard ecommerce performance relationships. You don’t need spreadsheets—just accurate inputs.
Conversions = Target Revenue / AOV
Required Ad Spend = Target Revenue / Target ROAS
Required Traffic = Conversions / Conversion Rate
What to enter (and how to avoid bad assumptions)
- Use a monthly or campaign revenue goal.
- Be explicit about timeframe (e.g., “$300k this month”).
- If you’re scaling, test multiple revenue targets.
- Use your last 30–90 days AOV (not a “best day”).
- If ads drive lower AOV than organic, use the paid AOV.
- Consider running scenarios with -10% AOV to stay safe.
- Use your paid traffic conversion rate (often lower than overall site CR).
- If you track by channel, use the channel you’re budgeting for (Google vs Meta).
- Small changes in CR massively impact required traffic—run sensitivity tests.
- Set ROAS based on profitability, not wishful thinking.
- Compare it to break-even ROAS to understand your safety margin.
- If your ROAS target is close to break-even, scaling is fragile.
Basic vs Advanced mode (when to use which)
| Mode | Includes | Best for |
|---|---|---|
| Basic | Target revenue, AOV, conversion rate, gross margin, target ROAS. | Fast budgeting and traffic planning from revenue goals. |
| Advanced | Fees, logistics, returns, loss per return, and optional LTV multiplier. | More realistic profitability modeling (especially when returns matter). |
How to interpret the results (with real-world guidance)
This shows the minimum spend, traffic, and orders needed to hit your revenue target.
- If required traffic looks huge, your conversion rate assumption may be too optimistic.
- If conversions look unrealistic, revisit AOV or timeframe.
Your safety gap is the distance between your target ROAS and break-even ROAS.
- Small gap: performance swings can make campaigns unprofitable.
- Large gap: you have room to scale and absorb volatility.
This tells you how much margin remains after ads at your ROAS target.
- If net margin after ads is low, don’t scale aggressively—optimize first.
- Watch returns and logistics: they often explain “mystery losses”.
If customers repurchase, your effective profitability improves and your break-even ROAS drops.
- Use this to evaluate how aggressive you can be when you have repeat customers.
- If LTV is uncertain, keep it conservative.
Practical tips to improve your plan (and hit ROAS targets)
- Bundles, upsells, and cross-sells
- Free shipping threshold
- Smart merchandising (best-sellers, add-ons)
- Speed up pages and checkout
- Strengthen trust (reviews, delivery info, returns policy)
- Fix product page clarity (images, sizing, specs)
- Negotiate COGS and shipping rates
- Reduce payment fees where possible
- Optimize discount strategy (avoid margin killers)
- Better sizing/fit guidance and product info
- Higher-quality photos and expectations-setting
- Improve packaging to reduce damage-related returns
Related calculators
FAQ
How much should I spend on ads to make my revenue goal?
Use the Ad Budget Planner and enter your target revenue and target ROAS. The calculator returns the required ad spend. Then use your AOV and conversion rate to estimate the traffic and orders needed.
What is a good ROAS for ecommerce?
A “good” ROAS depends on your margins and costs. The best benchmark is your break-even ROAS. If your ROAS is close to break-even, scaling is risky. Use the Break-even ROAS calculator to find your minimum.
Why does conversion rate matter for ad budget planning?
Conversion rate determines how much traffic you need to generate a given number of orders. Even a small drop in conversion rate can require significantly more traffic (and budget) to hit the same revenue goal. If you want to set a clear CR benchmark, try the Target Conversion Rate calculator.
What if my target ROAS is close to my break-even ROAS?
That means your plan has little margin for error. Small changes in CPC, conversion rate, returns, or fees can turn profit into loss. In that situation, improve unit economics or conversion rate before scaling spend.
Does the Advanced mode make the plan more accurate?
Yes. Advanced mode accounts for transaction fees, logistics, returns, and optional LTV. This produces a more realistic break-even ROAS and profit projection—especially for stores with meaningful return rates.
How can I translate ROAS into a maximum CPA?
ROAS is a revenue-based metric, while CPA is an acquisition cost metric. If you want a clear “do-not-exceed” acquisition limit, use the Max CPA calculator.