Advertising math cheat sheet (18 formulas)
Short answer: Every core advertising formula on one page — from CPC and CTR to ROAS, CAC, and LTV. Bookmark it, and each metric links to a deeper guide and a free calculator. Free to reference with a link back.
Key takeaways
- Break-even ROAS = 1 / gross margin — the line your ROAS actually has to beat.
- Break-even CPC = AOV x margin x conversion rate — the most you can pay per click.
- CPA = spend / conversions; CAC adds all sales & marketing cost per new customer.
- A ~3:1 LTV:CAC ratio is a common health benchmark.
Link to this cheat sheet (free): found it useful? Reference it from your site — a credit link back is appreciated.
Click & impression metrics
| Metric | Formula | What it tells you |
|---|---|---|
| CPC | cost / clicks | Average price you pay per click |
| CPM | (cost / impressions) x 1000 | Cost per 1,000 impressions |
| CTR | clicks / impressions | How often viewers click |
| Conversion rate | conversions / clicks | Share of clicks that convert |
Cost & profit per action
| Metric | Formula | What it tells you |
|---|---|---|
| CPA | ad spend / conversions | Average cost per conversion |
| AOV | revenue / orders | Average order value |
| Break-even CPC | AOV x margin x conversion rate | Max you can pay per click |
| Profit per click | (AOV x margin x conv. rate) - CPC | Profit each click leaves you |
Run these instantly with the break-even CPC calculator and profit-per-click calculator.
Return on spend
| Metric | Formula | What it tells you |
|---|---|---|
| ROAS | revenue / ad spend | Revenue per $1 of ad spend |
| Break-even ROAS | 1 / gross margin | ROAS needed to not lose money |
| MER | total revenue / total marketing spend | Blended efficiency across channels |
| Marketing ROI | (profit - cost) / cost | Net return on the investment |
Compare ROAS to your break-even line with the ROAS / MER calculator.
Customer economics
| Metric | Formula | What it tells you |
|---|---|---|
| CAC | total sales & marketing / new customers | Full cost to win a customer |
| LTV | AOV x purchase freq. x lifespan x margin | Lifetime gross profit per customer |
| LTV:CAC | LTV / CAC | Unit-economics health (aim ~3:1) |
| CAC payback | CAC / monthly margin per customer | Months to recover acquisition cost |
Check your ratios with the CPA / CAC calculator and LTV:CAC calculator.
Google Ads auction
| Metric | Formula | What it tells you |
|---|---|---|
| Ad Rank | bid x Quality Score (simplified) | Whether and where your ad shows |
| Actual CPC | (competitor Ad Rank / your QS) + 0.01 | What you actually pay per click |
| Impression share | impressions / eligible impressions | Share of available traffic you capture |
FAQ
What is the break-even ROAS formula?
Break-even ROAS = 1 / gross margin. At 50% margin you break even at 2x; at 25% margin you need 4x.
What is the break-even CPC formula?
Break-even CPC = AOV x gross margin x conversion rate — the most you can pay per click before losing money.
What is a healthy LTV:CAC ratio?
Around 3:1 is a common benchmark for a sustainable business.