Sat in a 20-minute meeting last week where the founder said „budget" ten times and the agency said it fourteen, and by the end neither was talking about the same thing. The two terms that blur most often and push companies into losses are ad spend and media budget. The third, break-even, nobody calculates. Separating them one by one.
Ad spend
The money that actually leaves your account toward Meta, Google, TikTok, LinkedIn. That's it. Not the agency fee. Not creative production. Not the tracking software. Just the amount Mark Zuckerberg sees on your invoice month after month.
When you say „I have 5,000 euros budget this month" and you mean how much you can push into the platforms, that's ad spend.
Media budget
Ad spend plus everything that allows ad spend to work. Agency fee, creative production (or the salary of the in-house creative team), tool subscriptions (Triple Whale, Hyros, whatever you run), sometimes card processing fees on platform invoices.
A concrete example. You have 5,000 euros in ad spend. You pay the agency 1,000 euros monthly fee. You allocate 500 for new photoshoots and video editing each month. Your real media budget is 6,500 euros, not 5,000. When you calculate marketing ROI, you benchmark sales against 6,500, not 5,000.
Break-even point
The point where sales cover every cost, variable plus fixed plus marketing. Below break-even, you're bleeding money even when ROAS looks good. Above, every extra euro is real profit.
The formula you drop into one Excel cell and never forget: Break-even revenue = (Fixed monthly costs + Media budget) divided by Net margin.
Example with real numbers
- Fixed costs: 3,000 euros per month. Rent, salaries, software, accounting, utilities.
- Media budget: 5,000 euros per month. Ad spend plus agency fee plus creative.
- Weighted net margin: 30%.
- Break-even revenue = 8,000 divided by 0.30 = 26,667 euros of revenue per month.
With those numbers, any month you come in under 26,667 euros of sales means you lost money. Even if the agency shows you ROAS 3x. Most founders I talk to don't know this number for their own business and make scaling decisions blind. Double the budget, you also double the break-even threshold. If sales don't double, you enter losses on a curve that gets worse fast.
Practical thresholds for the commission model
We work on 5-10% commission of generated revenue. For it to make sense both for you and for us, three thresholds come into play. Below them, we don't start.
- Minimum ad spend of 2,000 euros per month. Below that, Meta and Google algorithms don't have enough data to optimize coherently. You pay for a learning phase that never ends.
- Alternatively, existing sales of at least 5,000 euros per month. Means you have an organic base we can scale. Zero current sales plus small budget equals zero amplified.
- Net margin above 15%. After the agency commission, anything under 15% leaves crumbs that don't cover the packaging.