Definition
Email campaign breakeven is the point at which a campaign's revenue exactly equals its costs, so the campaign neither makes nor loses money. It can be expressed as the number of conversions, the revenue amount, or the conversion rate required to cover costs. Breakeven analysis tells a sender the minimum performance a campaign must achieve before it becomes profitable.
How It Works
Every campaign carries costs, both fixed and variable. Breakeven analysis identifies the level of performance at which those costs are recovered.
- Fixed costs — expenses that do not vary with conversions, such as design, copywriting, and platform fees.
- Variable costs — costs that scale with conversions, including the cost of goods sold and fulfilment.
- Contribution margin — the difference between revenue per conversion and variable cost is what each conversion contributes toward covering fixed costs.
The breakeven point is a decision-making threshold. If a campaign is unlikely to reach breakeven, it should be redesigned or not sent. Breakeven is a foundational concept within email-roi and margin analysis.
How to Calculate
Calculate breakeven in three steps:
- Identify fixed costs — total the campaign's fixed expenses.
- Calculate contribution per conversion — subtract variable cost per conversion from revenue per conversion.
- Divide — divide fixed costs by contribution per conversion to find the required number of conversions.
Breakeven Conversions = Fixed Campaign Cost / (Revenue per Conversion - Variable Cost per Conversion)
| Variable | Description |
|---|---|
| Fixed Campaign Cost | Costs that do not vary with conversions |
| Revenue per Conversion | Average revenue earned per conversion |
| Variable Cost per Conversion | Cost that scales with each conversion |
Example
A campaign has £5,000 in fixed costs, an average revenue of £60 per conversion, and variable costs of £35 per conversion, leaving a £25 contribution per conversion. Dividing £5,000 by £25 gives a breakeven of 200 conversions. The campaign needs 200 conversions to break even, and every conversion beyond that is profit.
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Frequently Asked Questions
Breakeven identifies the minimum performance required to avoid a loss, while email-roi measures the actual return relative to cost. Breakeven is a threshold; ROI is a ratio of profit to spend.
Breakeven should account for variable costs by using contribution margin per conversion, not gross revenue. Ignoring variable costs overstates how quickly a campaign becomes profitable.
It forces a realistic assessment of whether a campaign can clear its costs. If projected conversions fall short of breakeven, the campaign should be redesigned or reconsidered before spend is committed.
Yes. Multiplying the breakeven number of conversions by revenue per conversion yields the breakeven revenue level. This form is useful for communicating targets in revenue terms.