Ad Spend Decay & Margin Calculator
Most dropshipping calculators tell you if a campaign is profitable right now. This one tells you when it stops being profitable — and by how much. Designed for dropshippers and DTC brands running paid ads on Meta, TikTok, or Google, it calculates your break-even CPC, ROAS floor, and 12-month profit decay timeline from a single set of inputs. No spreadsheet, no signup, and no lag — every number updates as you drag the sliders.
Who this is for: You are selling a physical product through a Shopify, WooCommerce, or TikTok Shop store. You are using paid ads on Meta, TikTok, or Google to drive traffic. Your margins feel thin and you want to know exactly how much CPC headroom you have before each sale starts losing money. This calculator gives you that number in under 60 seconds.
How to Use the Ad Spend Decay Calculator
Six steps to go from inputs to a full profitability picture — including your 12-month decay forecast.
Enter Selling Price & COGS
Type the price your customer pays and what you pay your supplier. The difference — your gross profit — is the ceiling for everything that follows. If a product sells for $50 and costs $15 to source, your gross profit is $35. That $35 must cover every ad dollar you spend and still leave a margin worth running the business for.
Set Your Conversion Rate
Drag the slider to your landing page's conversion rate. This single number controls how many clicks you must buy to generate one sale. At 2%, that is 50 clicks per order. At 1%, it doubles to 100. Your conversion rate is the most powerful lever in this entire calculator — improving it by 1 percentage point can be worth more than halving your CPC.
Drag the CPC Slider to Your Real Cost
Pull the slider to your current average cost-per-click. The yellow break-even marker moves as your inputs change — the moment your CPC thumb crosses that marker, the profit number turns red. This is the core of the tool: a live visual of exactly how much runway you have before each click starts costing you money.
Read Your Break-Even Thresholds
The Metrics section shows you two non-negotiable numbers: your break-even CPC (the maximum you can pay per click without losing money) and your break-even ROAS (the minimum return your campaign must generate per ad dollar). Keep both visible when setting bids or evaluating campaign performance inside Meta Ads Manager, TikTok Ads, or Google Ads.
Run the 12-Month Decay Forecast
Switch to the Decay tab, set a realistic monthly CPC increase rate (10–15% is conservative for most ad platforms in 2026), and read which calendar month your campaign stops being profitable. This is the number most dropshippers never calculate — and why campaigns that started profitable become money pits three to five months later without any change in creative or product.
Study the Profit Heatmap
The Heatmap tab shows your net profit across a 6×5 grid of CPC and conversion rate combinations. Green cells are profitable. Red cells destroy margin. Use this to set realistic targets: if you are currently at $0.80 CPC and 2% CR (a yellow or red cell), the heatmap tells you exactly which improvement — lower CPC, higher CR, or both — is required to reach profitability.
Key Terms: What Each Metric Actually Means
CPC (Cost Per Click)
The amount you pay every time someone clicks your ad and lands on your store. Pulled directly from your ad platform dashboard. Lower CPC means more traffic for the same budget — but CPC alone means nothing without knowing your conversion rate.
Impact: A $0.10 CPC increase at 50 clicks per sale adds $5 to your customer acquisition cost — which can wipe out an entire margin tier.
COGS (Cost of Goods Sold)
What you pay your supplier per unit before shipping. In dropshipping this is typically your AliExpress, CJ Dropshipping, or private supplier quote. Does not include payment gateway fees, shipping, or refunds — those belong in advanced mode.
Impact: Shaving $3 off COGS has the same effect as reducing your CPC by $3 ÷ Clicks-Per-Sale. On a product needing 50 clicks per sale, that is a $0.06 CPC equivalent.
Conversion Rate (CR)
The percentage of ad clicks that result in a completed purchase. A 2% rate means 2 out of every 100 visitors buy. Average rates range from 1–3.5% for dropshipping stores in 2026, with TikTok traffic on the lower end and Google Shopping intent traffic on the higher end.
Impact: Raising CR from 2% to 2.5% reduces clicks-per-sale from 50 to 40 — a 20% reduction in your ad cost per sale without touching a single bid.
Break-Even CPC
The exact CPC at which your ad revenue covers your COGS and nothing is left. Calculated as: Gross Profit ÷ (100 ÷ Conversion Rate). This is your hard red line — the slider marker you must stay left of.
Impact: Running above break-even CPC at scale is the fastest way to lose money in e-commerce. A campaign doing 200 sales per month at $0.10 above break-even loses $1,200 per month before noticing.
ROAS (Return on Ad Spend)
Revenue generated per dollar spent on ads. A 3× ROAS means $3 in revenue per $1 of ad spend. Reported natively by Meta, TikTok, and Google — but none of them subtract your COGS before showing you this number, which is why a 'good' ROAS can still be a loss.
Impact: Your break-even ROAS depends entirely on your gross margin. A 20% margin needs 5× ROAS to break even. A 50% margin only needs 2×. There is no universal 'good ROAS' number.
Ad Spend Decay
The predictable erosion of campaign profitability over time as CPCs rise. Happens because ad auctions get more competitive, warm audiences exhaust faster than they replenish, and creative performance degrades. It is not a bug in your campaign — it is a structural feature of every CPC-based platform.
Impact: At a 10% monthly CPC increase, a campaign earning $10 profit per sale in January earns $0 by month five. Most dropshippers only discover this when the bank account confirms it.
The Formulas Behind Every Number
Every output in this calculator is derived from six chained formulas. Understanding them tells you which input to change when a campaign needs fixing.
Selling Price − COGSYour maximum ad budget per sale before any profit.
100 ÷ Conversion Rate (%)Halving your CPC is the same as doubling your conversion rate — both cut this cost identically.
CPC × Clicks Per SaleThis is the real cost of acquiring one customer through paid ads.
Gross Profit − Ad Cost Per SaleWhat you actually keep after paying your supplier and the ad platform.
Gross Profit ÷ Clicks Per SaleAny CPC above this number means you lose money on every single sale.
Selling Price ÷ Gross ProfitIf platform ROAS drops below this, the campaign is operating at a loss regardless of revenue.
The Decay Formula (What makes this tool unique)
Each month's CPC is calculated as: CPC_month = Starting CPC × (1 + Monthly Increase %)^Month. This is compound growth — the same math that governs inflation and interest rates.
A 10% monthly increase does not mean CPC goes from $0.50 to $1.50 in ten months linearly.
It means $0.50 → $0.55 → $0.61 → $0.67 → $0.73 → $0.81 — reaching break-even at month five
on a product with a $0.70 break-even CPC. Compound CPC growth is why campaigns that
felt sustainable in Q1 become cash drains by Q2 without the business owner noticing.
Real-World Examples: Three Products, Three Outcomes
Same calculator, same formulas — completely different conclusions. The inputs are what matter.
Print-on-demand T-shirt, Meta Ads
LosingA campaign like this looks healthy in Meta Ads Manager — clicks are cheap, ROAS reads above 2×. But with a 1.8% conversion rate, 55.5 clicks are needed per sale. At $0.45 CPC that is $25 in ad spend against a $21 gross profit. This campaign loses $4 per order at scale. The fix is not lower CPC — it is improving the product page to push CR past 2.2%.
Posture corrector, TikTok Ads
ProfitableHigh conversion rate (3.2%) means only 31 clicks per sale. At $0.38 CPC that is $11.88 in ad spend against a $38 gross profit. This store earns $26 net per sale — a 53% margin. TikTok's lower CPC combined with a problem-aware audience creates the ideal scenario. The risk is creative fatigue: TikTok ad sets decay faster than Meta, and CPC typically rises 10–20% monthly as the same audience sees the ad repeatedly.
Resistance bands kit, Google Shopping
At the edgeGoogle Shopping CPC for fitness products averages $1.10–$1.80 in 2026. At 2.5% CR, 40 clicks are needed per sale — $44 in ad spend against a $26 gross profit. This store is technically losing $18 per organic-looking campaign. The break-even CPC is $1.04, so the campaign is only $0.06 above break-even. One small Quality Score drop, one competitor entering the auction, and margin collapses entirely.
The pattern across all three: The product with the highest break-even CPC has the most durable business, not the one with the highest revenue. Break-even CPC is the single best proxy for how resilient a product is to rising ad costs. Before picking a product to scale, calculate its break-even CPC first.
Six Ways Dropshippers and DTC Brands Use This Calculator
The tool is built around the decisions you actually face running paid traffic — not abstract financial modeling.
Before launching a new product
Run the numbers before spending a single dollar. Enter your expected selling price, supplier quote, and a conservative 1.5% conversion rate estimate. The break-even CPC tells you whether the product's margin can survive real-world ad costs in your niche — before you waste a testing budget discovering it cannot.
Diagnosing why a profitable campaign turned red
Pull your current CPC from Meta Ads Manager or TikTok Ads and enter it. If you are above break-even CPC, the campaign math has broken — not the creative, not the product page, not the offer. You either need to reduce CPC (new creative, broader audience, lower bids) or increase gross profit (price increase, COGS renegotiation).
Forecasting CPC budget season adjustments
Use the Decay tab with a 40–50% monthly increase rate to simulate Q4 ad cost spikes. This tells you how much you need to raise your prices or improve your conversion rate to maintain profitability during Black Friday and Christmas — when every advertiser floods the same auctions and CPCs spike hard.
Comparing two products before picking a winner
Run both products through the calculator with the same CPC assumption. The one with the higher break-even CPC has more margin tolerance — it can absorb ad cost increases without flipping to a loss. That is often the better product to scale, even if the other product has a higher selling price.
Setting ROAS targets for ad platform bid strategies
Enter your product details and read the break-even ROAS. Set your target ROAS in Meta's Advantage+ or Google's Target ROAS bidding at 20–30% above this number. This gives you a genuine profit buffer instead of guessing at an industry benchmark that may not match your specific product margin.
Negotiating COGS with suppliers
Use the heatmap to show how a $2–$3 reduction in COGS shifts your entire profitable zone. A supplier negotiation that seems minor — $15 down to $12 on a $50 product — raises your break-even CPC by $0.06, which at 50 clicks per sale can mean the difference between a campaign that works and one that bleeds.
Questions Dropshippers Actually Ask
Answers to the ad spend, margin, and ROAS questions searched most often by dropshippers and DTC operators in 2026.