Your Black Friday discount raises the ROAS you need to break even

You set a 40 percent off sale for Black Friday. Your Facebook ads were bringing in 2 dollars for every dollar in all October, which was comfortably profitable. Black Friday weekend comes, the ads still bring in 2 dollars for every dollar, and you lose money on every order.

Here is the short version. A discount cuts your price but not your costs. So the money left in each order falls much faster than the price does, and the return your ads need just to break even goes up, sometimes a lot. It happens in the same week that ads cost the most to run. Work out your Black Friday breakeven before the sale, not after.

The maths on one product

Take a product that sells for 50 dollars on your Shopify store. Making it, packing it, shipping it and paying the card fees costs you about 20 dollars. That leaves 30 dollars, which is the most you can spend on ads to win that sale and still break even.

Your breakeven ROAS is the price divided by what is left: 50 divided by 30 is 1.67. In Ads Manager, anything above 1.67 dollars back for every dollar spent makes you money.

Now put it on sale. The 20 dollars of cost does not move, because the product, the box and the courier cost the same.

Discount	Customer pays	Left after costs	Most you can pay per sale	Breakeven ROAS
None	50 dollars	30 dollars	30 dollars	1.67
20% off	40 dollars	20 dollars	20 dollars	2.00
30% off	35 dollars	15 dollars	15 dollars	2.33
40% off	30 dollars	10 dollars	10 dollars	3.00
50% off	25 dollars	5 dollars	5 dollars	5.00

A 40 percent discount takes 40 percent off the price and two thirds off what you can afford to pay for the sale. At 50 percent off, you need your ads to bring back 5 dollars for every dollar just to stand still.

Then the ads get more expensive

The cost of showing your ad to a thousand people, which Ads Manager calls CPM, goes up sharply in late November because every other store with a sale is trying to reach the same shoppers. When it costs more to show an ad, each sale costs more.

So on Black Friday two things squeeze you at once. What you can afford to pay for a sale falls, because of your discount. What you actually pay for a sale rises, because of everyone else’s. An account that was comfortably profitable in October can be losing money on every order by the Saturday, without a single ad having got worse.

Work out your own number

Take your Black Friday price, not your normal price.
Subtract every cost of fulfilling that order: the product, packaging, shipping, Shopify and payment fees, and an allowance for returns.
What is left is the most you can pay Facebook for that sale. Write it down. That is your maximum cost per purchase for the weekend.
Divide the Black Friday price by that number. That is your breakeven ROAS for the sale.

The breakeven ROAS calculator does this properly with your full cost stack. Run it twice, once at your normal price and once at your sale price, and look at the gap.

If your average order is several products, use your average order value on the sale instead of one product price. The logic is the same.

Ways to discount that keep more margin

If the numbers at your planned discount look impossible, that is not a reason to skip Black Friday. It is a reason to change the offer.

A smaller percentage. Twenty percent off leaves you twice the margin per order that 40 percent does on the product above.
A bundle. Two or three products at a better price raises what each customer spends, while shipping and card fees stay roughly the same per order.
Free shipping over a threshold. Set it a little above your average order so people add one more thing.
A gift with purchase. Something that costs you 3 dollars but feels like it is worth 15 dollars to the customer protects margin far better than 15 dollars off.

About new customers

The argument you will hear is that Black Friday buyers are new customers, so it is fine to lose money on the first order. Sometimes that is true. I have written about judging ads on what a customer is worth over time rather than on day one, and it applies here too.

But be honest with yourself about it. People who came in for a big discount often come back less than your normal customers do. Before you plan to lose money on the first order, look at what last year’s Black Friday buyers actually did afterwards in Shopify. If most of them never ordered again, the first order has to pay for itself.

Bottom line

Your October ROAS is the wrong target for Black Friday. A discount raises the ROAS you need to break even, often by much more than the discount itself, in the same week ads cost the most to run. Know your breakeven at your sale price before the weekend, and pick an offer that leaves you enough margin to keep advertising through it.

If you want your Black Friday numbers checked against your real costs before you commit to an offer, that is what a teardown call is for.

Common questions

How does a Black Friday discount change my breakeven ROAS?

A discount takes money off the price but leaves your product, shipping and fee costs roughly where they were, so the profit left in each order shrinks much faster than the price does. On a 50 dollar product that costs 20 dollars to make and ship, you break even at a ROAS of 1.67 at full price. At 40 percent off the same order only leaves 10 dollars of margin, and you need a ROAS of 3.0 just to break even.

What ROAS do I need on Black Friday to be profitable?

There is no universal number. Take your Black Friday price, subtract everything it costs you to fulfil that order (product, shipping, packaging, payment fees and an allowance for returns), and what is left is the most you can pay Facebook for that sale. Divide the Black Friday price by that number and you have your breakeven ROAS for the sale. You need to beat it, not match it, to make money.

What is the maximum cost per purchase I can afford on Black Friday?

It is the money left in an order after all your costs, at the discounted price. If a customer pays 30 dollars and the order costs you 20 dollars to fulfil, you can afford to pay at most 10 dollars in ad spend to win that sale, and anything above 10 dollars is a loss. That is often far below what you were paying in October.

Is it worth running Facebook ads on Black Friday for a small Shopify store?

It is worth it when the cost of each sale stays under the margin left at your discount. Ads cost more to run that weekend, and a deep discount shrinks what you can afford, so the two squeeze each other. A smaller discount, a bundle that raises the order value, or a gift with purchase often keeps more margin than a bigger percentage off, and lets you keep advertising profitably through the weekend.

Should I judge Black Friday ads on ROAS or on new customers?

Mostly on whether each sale makes money, but it is fair to accept a thinner margin on a first order if you know those customers come back and buy again. Be honest about it though. Buyers who came in for a big discount often come back less than your normal customers do, so check what Black Friday buyers from last year actually did afterwards before counting on it.