How to use the break-even conversions calculator
Working out how many sales a campaign needs is far too optimistic if you divide cost by revenue per conversion. Revenue still carries variable costs: cost of goods, shipping, payment processing, returns. This calculator works from the contribution margin per conversion, which is revenue per conversion multiplied by your contribution margin.
Break-even conversions are total cost divided by margin per conversion, rounded up. Truncating the decimal would leave part of the cost uncovered, so you need at least the rounded-up figure to stop losing money (when cost divides evenly by margin per conversion, net profit at exactly that figure is $0.00, not a positive number). With $40,000 of cost, $75 revenue per conversion and a 25% margin, margin per conversion is $18.75 and break-even is 2,134 conversions: that many returns $40,012.50, so net profit is $12.50 rather than the $6.25 shortfall 2,133 would leave.
Enter the conversions you have achieved and you also get net profit and how many conversions remain. A negative net profit means the campaign has not yet earned its cost back. Contribution margin varies by product and channel, so enter a figure you calculated yourself; no industry average is assumed here.
Frequently asked questions
For a digital product with almost no variable cost, yes. Keep in mind that payment processing fees and coupon discounts are variable costs too, so a true 100% is rare. At 100% the full revenue per conversion is treated as margin.
Include them only if they were incurred because of this campaign. Loading in fixed overhead that you would pay anyway inflates the break-even count well past what the campaign actually needs.