Break-even CPA
Break-even CPA is your ceiling: the most you can pay per customer before acquisition loses money. Formula: AOV × gross margin × (1 + repeat orders). An $80 order at 60% margin with 0.5 repeats supports $72.
Equivalent form: AOV × margin × (1 + repeat orders). The dial below runs the same arithmetic.
Worked
Three margin profiles
Thin-margin retail
AOV $60 · margin 25% · repeats 0.2 · ceiling $18.00
60 × 0.25 × 1.2. Barely room for paid acquisition at all; most survey medians exceed the ceiling. Volume must come from organic or the margin must move.
Mid-margin DTC
AOV $80 · margin 60% · repeats 0.5 · ceiling $72.00
80 × 0.60 × 1.5. The survey's overall $66.69 average sits just under the ceiling: viable, but with 8% headroom the account lives or dies on execution.
High-LTV subscription
AOV $40/mo · margin 80% · repeats 11 (12-mo life) · ceiling $384.00
40 × 0.80 × 12. A dozen retained months turn a $40 subscription into a $384 ceiling. This is why subscription businesses outbid everyone for the same click.
Interactive
Run your own ceiling
Pay more than $72.00 per customer and the acquisition loses money on contribution. Leave headroom below it; break-even is a ceiling, not a target.
Headroom
Break-even is a ceiling, not a target
Bidding at break-even means every measurement error, refund and attribution double-count lands you underwater. Practical discipline: set targets 20-30% below the ceiling, more if your AOV and repeat inputs are guesses. Feed the result into Target CPA bidding, sanity-check against your vertical median, and reconcile the margin view with break-even ROAS (the same ceiling in revenue units). Repeat-rate inputs deserve suspicion: use realized repeat orders from cohorts, not aspiration. The board-deck version of this math is CAC payback.