Forecast ROAS, contribution margin and cash flow across paid media, influencer, retail and promotions. Allocate budget to the styles, sizes and channels that actually sell through.
Why it matters
Benefits
Different categories carry different COGS, return rates and shipping costs (e.g., denim vs. accessories). Calculate break-even ROAS and contribution margin per collection so you scale only what stays profitable after discounts and returns.
Model how spend impacts sell-through targets and inventory coverage weeks. Allocate budget to protect full-price sales early in the season and avoid late-stage fire-sale promotions that erode brand equity.
Fashion often wins on new customer acquisition but profits on repeat. Plan budgets by channel based on blended CAC, LTV windows and cohort performance – balancing prospecting with retention flows like email, SMS and loyalty.
Link marketing investment to cash constraints: deposits to factories, inbound freight, warehousing and returns reserves. Forecast payback period so you can fund reorders of best-sellers without starving operations.
Use cases
Challenge
A brand is preparing a Spring/Summer drop with limited OTB (open-to-buy) and wants to hit a sell-through target before the first markdown window.
Solution
Use the ROI Calculator & Budget Planner to forecast demand by channel, set a target blended ROAS based on margin and return rate, and stage spend across launch week, mid-season and remarketing to maximize full-price sell-through.
Challenge
Paid social is driving volume, but heavy promo codes and high return rates are shrinking contribution margin, especially in apparel sizes with higher fit-related returns.
Solution
Model ROI with promo depth, expected return rate and shipping subsidy included. Set guardrails (max discount, min contribution margin, break-even ROAS) and reallocate budget toward creatives, categories and audiences with better net profitability.
Challenge
The team must decide whether to invest more in DTC acquisition or prioritize wholesale orders that have lower marketing costs but different margin and payment terms.
Solution
Compare scenarios side-by-side: DTC CAC, AOV, return rate and LTV vs. wholesale margin, chargebacks and net-60 payment timing. Choose the mix that maximizes cash flow and profit per unit over the season.
More industries
FAQ
At minimum: AOV, gross margin or COGS by category, shipping and fulfillment costs, payment processing fees, return rate and return handling cost, promo/markdown assumptions, CAC or CPM/CPC by channel, conversion rate, repeat purchase rate and time-to-repeat. For planning inventory-heavy drops, add sell-through targets, inventory units available, replenishment lead times and a markdown calendar.
Break-even ROAS is driven by contribution margin, not just gross margin. A practical approach is: net revenue per order (AOV minus discounts) minus variable costs (COGS, shipping subsidy, pick-pack, payment fees, return allowance) equals contribution. Break-even ROAS ≈ net revenue ÷ allowable ad spend per order, where allowable ad spend is the contribution you’re willing to spend to acquire the order. Because returns and promos swing results in apparel, include them explicitly rather than using a single blended margin.
Yes – and it should. Model returns as both lost revenue and added cost (reverse logistics, restocking, potential damage). You can run scenarios by category and size curve, then set different ROAS targets for high-return segments (e.g., fitted dresses) vs. low-return segments (e.g., accessories).
By forecasting demand and payback, you can tie marketing spend to inventory availability and reorder timing. The planner helps you avoid spending aggressively when stock is thin (leading to missed demand) or when inventory is too deep (leading to markdowns). It also supports OTB by showing which categories and channels deliver the best net profit per unit and fastest cash recovery.
Join fashion & apparel businesses using The AI CMO to outmarket the competition.