BERT Analysis Model

Last updated —
How the model works

Legend

  • Sales
  • Fixed costs
  • Variable costs
  • Contribution margin — the share of every euro of sales left after variable costs. If variable costs are 60% of revenue, the margin is 40%
  • ROMA — return on marketing and adv spend: euros of sales generated per euro invested across all marketing spend (a ROMA of 4 = €4 of sales for every €1 spent)
  • BERT — Break-Even ROAS Threshold: the minimum ROMA (1/M) below which break-even is impossible at any revenue

The reasoning

Profit is what's left after subtracting all costs:

Profit = Sales − Variable costs − marketing spend − Fixed costs

Two of these costs depend on sales. Variable costs are a fixed share of revenue, and marketing spend is revenue divided by ROMA:

Variable costs = (1 − M) · Sales      Marketing spend = SalesROMA

Substituting and factoring out Sales, profit becomes:

Profit = Sales · ( M − 1ROMA ) − Fixed costs

Break-even is where profit is zero. Solving for sales gives the break-even revenue:

Break-even revenue = Fixed costsM − 1/ROMA

The denominator M − 1/ROMA is the contribution margin on every euro of revenue: what's left of each euro sold after variable costs and marketing. It's the purple curve on the chart, available via the toggle.

There's an important condition: break-even only exists if the margin exceeds the marketing cost per euro sold. In other words, ROMA must be greater than:

ROMA > 1M   (BERT)

Below this threshold every sale loses money: selling more does not get you to break-even, it pushes it further away.

At a glance

Fixed costs for the period (€)
€ 150,000
Contribution margin (%)
Variable costs: 60.0% of revenue
BERT
2.50×
 

Break-even revenue over Fixed costs at every ROMA level

X max: Y max:

Tables

Fixed costs for the period (€)
€ 150,000
Contribution margin (%)
Variable costs: 60.0% of revenue
BERT
2.50×
 
Sales Price (€)
per unit
Last updated —
ROMA Break-even revenue / FC Break-even revenue (€) Break-even units (#) Breakeven mkt exp (€)
Monthly Sales (€)
revenue for the period
Units (#)
—
Monthly Sales / price
ROMA Mrk. Exp (€) EBITDA (€) EBITDA %
ROMA
€ of sales per € of marketing
EBITDA % max
—
highest reachable at this ROMA (M − 1/ROMA)
Revenue max
—
revenue to get within 1 pp of the EBITDA% ceiling
Units max
—
units at that revenue (revenue / price)
EBITDA % (target) EBITDA (€) Sales (€) Units (#) Mrkt Exp (€)

Revenue curve — EBITDA % vs Revenue

Desired EBITDA %
theoretical ceiling = contribution margin (m)
ROMA Sales (€) Units (#) EBITDA (€)

For each ROMA level, the table shows the sales needed to reach the desired EBITDA %, using the current fixed costs, contribution margin and price. Where the margin per euro m − 1/ROMA is ≤ the target, the goal is unreachable at any volume: a higher ROMA is required.