A store bills €30,000 a month and makes no profit

This is a hypothetical store. The figures do not belong to any real company and they are not industry benchmarks: they are a declared starting point so that the calculation can be followed and reproduced.

It sells kitchen accessories in Spain, from its own catalog, in one country. It bills €30,000.00 a month and its owner cannot see why nothing is left. The question is the usual one: are the campaigns broken, or is the business broken?

The starting figures

The order of calculation

1. The real cost of returns, to get a provision per order.
2. Contribution margin on the average order, with that provision inside it.
3. The minimum price needed for a target margin.
4. The maximum CAC that margin can carry.
5. Break-even ROAS.
6. Monthly result and break-even point, across three scenarios.

Each step uses the previous step's output. No figure in this text is typed by hand.

Step 1 · returns cost more than they look

At a rate of 8%, out of 600 orders, 48 come back. Each return costs €13.75 in direct cost — return shipping, handling, the fee that is not refunded and the share of product that cannot be resold — and on top of that it takes away the contribution of that sale, €16.67. The total impact of one return is €30.42.

Spread across every order, that is a provision of €2.43 per order, or €1,460.27 a month. It is the first surprise of the diagnosis: returns eat 14.6% of contribution before advertising.

One more figure from the engine: with this structure, the highest return rate the business could absorb before running out of contribution is 54.8%, and each additional point of returns costs €182.53 a month.

Step 2 · contribution margin

Out of the €50.00 average order, stripping the tax leaves €41.32. That is revenue: under the Spanish accounting rules the VAT charged is not part of it, and it is not the same thing as the taxable base or as the cash collected. Taking out product, packaging, shipping, payment processing and the returns provision, contribution before advertising is €14.24.

And here comes the blow. Paying €14.00 in acquisition cost, the contribution left per order is €0.24.

Twenty-four cents. That is what each order contributes towards rent, software, salaries and everything else.

Step 3 · what price would be needed

The minimum price engine says that, with these costs, the ex-tax break-even price is €26.76 and that for a target margin of 25% the product would have to sell at €35.85 ex-tax. Against the current ex-tax price, that is €5.47 more, or 15.3%.

Step 4 · the acquisition ceiling

Using contribution before advertising, and assuming a customer comes back 0.4 more times, accumulated contribution per customer is €19.93. That is the break-even maximum CAC: €19.93.

In other words: the current CAC of €14.00 is below the ceiling, with €5.93 of headroom. The campaigns are not out of control. That matters, because it is the opposite of what the owner expected to hear.

Step 5 · break-even ROAS

With this structure, break-even ROAS is 3.51 and maximum ACOS is 28.5%. If the ad dashboard shows a ROAS above 3.51, the advertising pays for itself. The problem is somewhere else.

Step 6 · the result and the three scenarios

With 600 orders and a contribution of €0.24, total contribution for the month is €143.12. Against €6,200.00 of fixed costs, the result is €−6,056.88.

Base scenario. Break-even sits at 25,993 orders a month. That is not a target: it is the arithmetic way of saying that with this contribution there is no volume that fixes the business. Orders would have to multiply more than fortyfold.

Margin improvement. Lifting the average order from €50.00 to €54.00 and negotiating product cost from €18.00 down to €17.00, revenue becomes €32,400.00 and contribution per order goes from €0.24 to €4.49. Break-even drops to 1,381 orders and the result improves to €−3,507.01.

Volume improvement. Going up to 750 orders a month without touching anything else, revenue reaches €37,500.00 — a substantial jump — and the result moves to €−6,021.10.

The decision, derived

The gap to close is €6,056.88 a month.

• The margin lever closes €2,549.87, which is 42.1% of the gap.
• The volume lever closes €35.78, or 0.6%.

Is either of them enough on its own? yes, neither is: both leave the month in the red.

That is where the diagnosis comes from, and not from a hunch. This is not a campaign problem. CAC is below its ceiling and break-even ROAS is being met. It is a structural problem: contribution per order is so thin that volume multiplies it into nothing useful, because 0.6% of improvement in exchange for €37,500.00 of revenue is not a lever, it is noise.

The order of work the numbers point to is: margin first — price and product cost — then returns, and only then volume. Raising volume before fixing contribution multiplies the orders and the losses with them.

What would change the decision

If returns fell sharply. They take 14.6% of contribution before advertising. Cutting them is a margin lever that has not been tested here and that could change the ordering.

If the catalog were uneven. All of this works with the average order. If twenty per cent of the SKUs hold the margin, the real lever is assortment rather than price, and this analysis would not see it.

If repeat purchase were high. CAC is then judged against the customer rather than the order. With more repeat orders the ceiling rises and advertising has more room.

If fixed costs were not fixed. They are treated as fixed here. If part of them scales with orders, break-even moves.

If raising the price cut demand. The margin scenario assumes the same number of orders at a higher price. That is an optimiztic assumption and it has to be tested before being believed.

Independent checks

Every figure has been recalculated by hand, away from the engine:

• Revenue ex-tax: €50.00 divided by 1.21, checked.
• Contribution before advertising: net revenue minus product, packaging, shipping, fees and provision, added up separately.
• Break-even: fixed costs divided by contribution per order, divided separately.
• Monthly result: contribution per order times orders, minus fixed costs, checked by hand.
• The impact of one return: direct cost plus lost contribution, compared against the engine's output.

Limitations

• It works with the average order. An uneven catalog needs the calculation per SKU.
• It does not model seasonality or repeat purchase beyond the declared assumption.
• Tax is treated as not belonging to the seller in revenue, which is correct: VAT charged is not the seller's.
• Fixed costs are assumed constant.
• The three scenarios are case assumptions, not forecasts. Changing the price changes demand, and that effect is not modelled.

Sources and methodology

Sources

• Accounting rule. Spain's Plan General de Contabilidad, Royal Decree 1514/2007, recognition and measurement rule 12, consolidated text in the Boletín Oficial del Estado (BOE-A-2007-19884). It states in terms that VAT charged to customers does not form part of the revenue of the taxed transactions. This is what supports doing the whole calculation on tax-exclusive revenue. Territory: Spain. This is the Spanish accounting framework and it does not carry over to other markets on its own; the same principle exists elsewhere, but you have to open your own market's rules. In force; consolidated text consulted 9 September 2026.
• Regulator's interpretation. Ruling 5 in BOICAC 96, issued by Spain's Accounting and Audit Institute (ICAC). It confirms that taxes the company must charge on to third parties, and amounts received on behalf of third parties, do not form part of revenue. Territory: Spain. Consulted 9 September 2026.
• Tax statute. Ley 37/1992, the Spanish VAT Act, consolidated text in the Boletín Oficial del Estado (BOE-A-1992-28740). Article 88.Uno. Used only for the obligation to pass the tax on, the way it is passed on, and the relationship between the taxable person and the customer. It is not used as the basis for the accounting treatment of revenue — that is what the accounting rule above is for. Territory: Spain. In force; consolidated text consulted 9 September 2026.

Methodology

Five Profyza calculation engines, run in sequence: returns, contribution margin, minimum price, maximum CAC and break-even ROAS. The returns provision produced by the first one feeds all the others. No figure in this text is typed by hand: all of them are generated when the page is built and checked against an independent calculation.

All the data are hypothetical. They belong to no real company and they are not industry benchmarks.

Currency and market: euros, Spain.

Last reviewed: 9 September 2026.

Author: Profyza editorial team.

How the figures were produced. Each one is generated by the Profyza calculation engine for that step, using the inputs declared above. Every figure is also cross-checked against an independent arithmetic check — also automated — that recomputes it without calling the engine, which is what catches the text and the calculation drifting apart. It is not a human review, and this piece has not been reviewed by an economist, an accountant or a licensed adviser. If your situation needs that, get it.

Methodology: how all of this is calculated is set out on the methodology page.

Automated mathematical verification: Profyza calculation engines. This is not a human or professional review.