Black Friday break-even ROAS: how much discount can you afford?

Most webshops pick their Black Friday discount first and do the maths afterwards. In December the ads report shows a 4.0 ROAS and a record month, while the bank account shows something else.

This post is for webshop owners and marketing managers who run Google Ads or Meta Ads themselves, or with an agency, and want to know if November will make money. You’ll work out your break-even ROAS at full price and at your discount. You’ll see how deep you can discount before every order loses money. And you’ll get the tracking and bidding checks to run before the peak, including Google’s new promotion mode.

After reading, you’ll be able to:

• Calculate break-even ROAS with gross margin and with contribution margin, and know which one to trust
• Work out the maximum discount your margin can carry at the ROAS you expect
• Decide which products get a discount, a bundle or no discount at all
• Check your conversion tracking before the traffic peak
• Set up Google Ads bidding for Black Friday with promotion mode and seasonality adjustments

Meet Blad & Bloesem

To keep the maths concrete, we’ll follow one webshop through the whole post. Blad & Bloesem is a fictional Dutch webshop selling loose-leaf tea and teaware. All prices are excluding VAT.

Product	Price	Cost of goods
Winter gift set	€60	€27
Tea tin, 100 g	€20	€6
Cast-iron teapot	€45	€25

Every order also costs Blad & Bloesem €10 that has nothing to do with the product: €5 shipping, €2 packaging and fulfilment, and €3 for payment fees and returns. This €10 comes back in every calculation below.

Step 1: Choose your margin, gross or contribution

Break-even ROAS is the ROAS at which an order makes exactly €0 after ad spend. Below that number, every order you buy loses money. The formula is short:

Break-even ROAS = 1 ÷ margin

The tricky part is which margin you put in.

• Gross margin is price minus cost of goods. It’s the number most shop owners know by heart.
• Contribution margin is price minus cost of goods minus everything you pay per order: shipping, packaging, payment fees and returns. It’s what’s actually left to pay for ads.

For the winter gift set:

	Gross margin	Contribution margin
Calculation	€60 − €27 = €33	€60 − €27 − €10 = €23
Margin	55%	38%
Break-even ROAS	1.82	2.61

Same product, two break-even numbers. If you steer on 1.82, a campaign at a 2.2 ROAS looks profitable while it loses money on every order.

Gross margin is fine for a quick first check, and it’s what you get when you add cost of goods to Merchant Center. Use contribution margin for the decisions in this post. Across retail ad accounts, pdPlus found that working from gross margin makes break-even look 30 to 40% better than it really is.

Step 2: Recalculate break-even at your discount

A discount comes straight off your margin, because your cost of goods and shipping stay the same. So break-even ROAS climbs much faster than the discount percentage.

Here’s the winter gift set at different discounts:

Discount	Price	Break-even ROAS (gross)	Break-even ROAS (contribution)
0%	€60	1.82	2.61
10%	€54	2.00	3.18
15%	€51	2.13	3.64
20%	€48	2.29	4.36
25%	€45	2.50	5.62

Last year, Blad & Bloesem’s Google Ads delivered a 4.0 ROAS in Black Friday week. On gross margin, 20% off looks safe: you need 2.29 and you get 4.0. On contribution margin you need 4.36, so every gift set sold through ads at 20% off costs them money.

👉 Write your break-even down at full price and at every discount you’re considering, before you agree the offer. It takes ten minutes in October and saves an argument in December.

Step 3: Work out how much discount you can afford

You can turn the same maths around. Start from the ROAS you expect in Black Friday week (last year’s number is the best estimate you have) and calculate the deepest discount that still breaks even:

Maximum discount = (expected ROAS × margin − 1) ÷ (expected ROAS − 1)

For the gift set at an expected ROAS of 4.0:

	Gross margin (55%)	Contribution margin (38%)
Maximum discount	(4 × 0.55 − 1) ÷ 3 = 40%	(4 × 0.383 − 1) ÷ 3 = 17.8%

Gross margin says 40% is fine. Contribution margin says anything above 17.8% loses money. That’s the difference between a good November and a busy one.

The maximum discount is where you make €0, so stay below it. Blad & Bloesem goes for 15% off the gift set. At 15%, break-even is 3.64, which leaves some room if ROAS drops below last year.

This formula assumes your costs per order stay the same in euros, which is close enough for most shops. If your payment fees or return rate jump in November, add that to the €10 per order and run it again.

How many more orders you need

A discount only pays off if you sell more. To keep the same contribution as at full price, you need this many extra orders:

Extra orders needed = (contribution at full price ÷ contribution at the discount) − 1

For the gift set, which leaves €23 per order at full price:

Discount	Contribution per order	Extra orders needed
0%	€23	none
10%	€17	35%
15%	€14	64%
20%	€11	109%
25%	€8	188%

At 20% off, Blad & Bloesem has to sell more than twice as many gift sets just to end up where they were at full price, before paying for any extra ads. Compare that with last year: how many more orders did Black Friday week bring compared with a normal week in October?

Try it with your own numbers in the calculator above. It shows your break-even ROAS on both margins, your maximum discount and how many more orders you need. Everything is calculated in your browser, so your numbers aren’t stored or sent anywhere.

Step 4: Decide what gets a discount

With the maths done for the gift set, Blad & Bloesem runs the same check for every product. Three things come out of it.

Discount the products shoppers compare

Shoppers compare prices on a small part of your range. Omnia Retail puts it at 10 to 15% of the catalogue: your bestsellers and the products people check on Google Shopping and comparison sites. Those set whether your shop feels expensive or fair.

Give those products your Black Friday price. Keep the rest close to full price with a margin floor, because they sell in Q4 without a discount. The price competitiveness report in Merchant Center shows which of your products Google sees as more expensive than other shops.

Bundle the low-ticket products

A single tea tin at 20% off is €16. After €6 cost of goods and €10 per order, Blad & Bloesem makes exactly €0, before a single euro of ad spend.

A bundle fixes that. “Any 3 tins for €50, normally €60” is 17% off for the customer, but the €10 per-order cost is spread over three tins:

Offer	Revenue	Contribution	Break-even ROAS
1 tin at 20% off	€16	€0	none, every ad euro is a loss
3 tins for €50	€50	€22	2.27

Add a gift instead of a deeper discount

Blad & Bloesem gives the first 200 orders a sample tin. It costs €1.50 to make and sells for €8. That’s €300 in total. Raising the discount by 5 points on the same 200 orders, at an average order of €55, would cost €550.

Sort products into green, yellow and red

Put every product, or margin group, next to its break-even at the promo price:

Product	Black Friday offer	Break-even ROAS	Expected ROAS	Tier
Tea tins	3 for €50	2.27	4.0	Green
Winter gift set	15% off	3.64	4.0	Yellow
Cast-iron teapot	Full price	4.50	4.0	Red

• Green: comfortably above break-even. Give these the budget.
• Yellow: close to break-even. Keep them in, with a tighter target.
• Red: below break-even even at full price. Take them out of Shopping and Performance Max for the peak weeks, but keep your brand campaign running so a competitor doesn’t take your brand searches.

✅ Put the tier in a custom label in your product feed and split your Shopping or Performance Max campaigns by tier. In a mixed campaign, Google sends budget to whatever converts, including the red products.

Want to run this for your whole range? The Black Friday margin sheet does every calculation in this post per product: break-even, maximum discount, extra orders needed, the green, yellow or red tier, and a bundle check. Leave your email address and I’ll send you the link.

Step 5: Check your tracking before November

Every number above depends on what your tracking sends to Google and Meta. In November a broken tag costs more than in any other month, because Smart Bidding learns from the wrong data at your highest spend. These are the five checks I run on every webshop in October:

1. The conversion value is real revenue after discount. Excluding VAT and shipping. A flat value per order tells Google every order is worth the same, and it’ll buy the cheapest ones.
2. The transaction ID is filled in. Without it, a refresh of the thank-you page counts the order twice, and refreshes spike when your site is slow on Black Friday.
3. Place a test order with the live discount code. The discount path often runs a different checkout template with different tags, so check that the purchase arrives in Google Ads, GA4 and Meta with the right value.
4. Enhanced Conversions and Meta’s Conversions API are live and checked. Turning them on and confirming the match rate in the diagnostics are two different jobs. More in why the Meta Pixel alone isn’t enough.
5. Decide what you send as conversion value. Revenue is the default. If you send profit instead, Google bids on what an order leaves you. Blad & Bloesem would stop pushing the teapot automatically. That’s POAS bidding, explained in POAS vs ROAS.

If you switch to profit values, do it now and on one campaign first. It needs a few weeks of data before the peak.

Step 6: Set up Google Ads bidding for the peak

Google added a few bidding options this year that are built for exactly this period. Here’s what they do and how Blad & Bloesem would use them.

Promotion mode

Promotion mode is a beta for Search and Performance Max campaigns on Target ROAS. You set a window of 3 to 14 days, a ROAS tolerance and optionally extra daily budget. Within that window Google may bid below your normal target to win more volume, and after the end date everything switches back by itself.

Blad & Bloesem sets a window from 26 to 30 November on the green tea tin campaign. With a 500% target and a 20% tolerance, Google can go down to 400%. The bundle’s break-even is 227%, so there’s plenty of room. On the yellow gift set campaign they leave promotion mode off, because a 20% tolerance would take the target close to its 364% break-even.

Two things to know before you switch it on:

• While the window runs you can’t change the base Target ROAS, only the tolerance. Set the target right before the window starts.
• It’s still a beta and not every account has it. Check the bid strategy settings of your Search or Performance Max campaign.

Seasonality adjustments

A seasonality adjustment tells Smart Bidding to expect a higher conversion rate for a short period. Google built it for 1 to 7 days. Size it on what your conversion rate actually did on those days last year, and end it on Cyber Monday.

Google allows promotion mode and a seasonality adjustment on the same campaign, but hasn’t documented how they work together. My advice is to pick one per campaign. Both push bids up, and together you can’t tell which one did what.

Plan a negative adjustment for the first days of December too, when conversion rates drop faster than Smart Bidding expects.

Changing targets and budgets

On 15 October, Google Ads product manager Tal Akabas said on Google’s Ads Decoded podcast that changing the target or budget of an established campaign doesn’t start a new learning period. That gives more room to adjust during November than the old rule of thumb suggested.

There’s one catch. Since 17 August, campaigns that are limited by budget deliver towards their target, where before they often beat it. Raise the budget on such a campaign for Black Friday and your cost per conversion can rise towards your target. I wrote about this in Google’s target change and a free script.

Smart Bidding Exploration and Product Value Optimization

• Smart Bidding Exploration is now available for Shopping and Performance Max. It lets a campaign run 5 to 30% below its target ROAS to find new searches, as long as it isn’t limited by budget. Run it outside the peak, so in January you know what it does for your shop.
• Product Value Optimization is a beta for Performance Max and Shopping that lets you tell bidding which products are worth more, for example by brand or category. If you have it, it’s a quick way to lower the value of red products without rebuilding campaigns.

Step 7: Read the result in February

The numbers you pull on 1 December aren’t final. Returns arrive into January, and Shopify books a January refund against the original November order. Google Ads conversions can keep coming in up to 30 days after the click.

Put a date in February in your calendar and compare four numbers: ad spend, orders, refunds and repeat purchases.

Then look at who you bought. Blad & Bloesem sold mostly gift sets to new customers, who bought a present and may never come back. Ometria followed new Black Friday customers for a year and found that 4% bought again within twelve months. The tea tin buyers are a different story: tea runs out. Check last year’s November customers in Shopify (Analytics, Reports, Customer cohort analysis) before you count on repeat purchases to pay for this year’s acquisition costs.

How Coby approaches this

Every ecommerce account we take on starts with the tracking: does the value Google and Meta receive match what the shop actually earned? After that we work out break-even per product group with the client’s own margins, and we set targets and campaign splits from those numbers.

Across 250+ tracking setups, we find the same gap again and again: the ad platform reports revenue, and nobody connects it to what an order leaves after costs. For clients with a varied range we send profit values to Google Ads, so bidding steers on margin automatically.

Before you agree your Black Friday offer

Work out break-even at full price and at your discount, with contribution margin. Use the maximum-discount formula to check your offer. Give the deep discount to the products shoppers compare, bundle the cheap ones, and keep red products out of your Shopping campaigns.

Want a second pair of eyes on your tracking or your Black Friday targets? I usually open an account by comparing Google Ads, GA4 and the shop backend for one month, and I nearly always find something. Happy to look at yours, whether or not we end up working together. Ask for a free tracking audit.

FAQ

How do I calculate break-even ROAS?
Divide 1 by your margin. With a 40% margin, break-even ROAS is 1 ÷ 0.40 = 2.5. Use contribution margin (after cost of goods, shipping, payment fees and returns) for the most reliable number.

What’s the difference between gross margin and contribution margin?
Gross margin is price minus cost of goods. Contribution margin also subtracts the costs you pay per order, like shipping, packaging, payment fees and returns. Contribution margin is lower, so it gives a higher, more realistic break-even ROAS.

How much discount can I give on Black Friday?
Use this formula: (expected ROAS × margin − 1) ÷ (expected ROAS − 1). With a 38% contribution margin and an expected ROAS of 4.0, the maximum is about 18%. Stay a few points below that, because at the maximum you make €0.

What is promotion mode in Google Ads?
Promotion mode is a beta for Search and Performance Max campaigns on Target ROAS. You set a 3 to 14 day window in which Google may bid below your target, optionally with extra budget. After the end date the settings switch back automatically.

Should I use promotion mode and a seasonality adjustment together?
Google allows both on one campaign but hasn’t documented how they interact. Pick one per campaign, so you can tell afterwards what caused the result.

How many more orders do I need when I give a discount?
Divide your contribution per order at full price by your contribution at the discount, and subtract 1. If an order leaves €23 at full price and €14 at 15% off, you need 64% more orders to keep the same contribution.

When can I calculate the real cost of my Black Friday customers?
In February. Returns come in through January and Google Ads conversions can arrive up to 30 days after the click, so a December calculation makes Black Friday look better than it was.

Written by Marloes Slotboom, founder of Coby Agency. Last updated: October 2026.