Diwali Sales Planning: How to Set Your Ad Budget and Stock Level Without Losing Money

Diwali falls on Sunday, November 8, 2026, and sellers everywhere are deciding two things at once: how much to spend on ads, and how much stock to buy. Both decisions can make or lose money, and both depend on numbers many sellers never calculate. Black Friday on November 27 and Cyber Monday on November 30 follow soon after, so the same planning pays off twice. This guide walks you through the math in simple steps, using one example product, so you can plan your own festive campaign.

Start with your margin before ads

Before you spend on ads, you need to know how much profit each sale leaves you before the ad cost. Our example product sells for $40. It costs $14 to buy, $6 for shipping and packaging, and the marketplace and payment fees are 10% of the price ($4).

Here, the profit before ads is $40 - $14 - $6 - $4 = $16 per order. The margin before ads is $16 / $40 = 40%. You can check your own figures in the Profit Margin Calculator.

Find your break-even ROAS

ROAS means return on ad spend: the sales you get for each dollar spent on ads. It counts sales, not profit, so a ROAS that looks good can still lose money. Your break-even ROAS is the lowest ROAS at which the ads pay for themselves.

With a 40% margin before ads, your break-even ROAS is 1 / 0.40 = 2.5x. If you spend $1,000 on ads, you need $2,500 of sales from them just to cover the ad spend. This table shows what happens at different ROAS levels for a $1,000 budget.

Notice that a 3x ROAS looks healthy on an ad dashboard, but it earns only $200 on $1,000. You can try your own numbers in the ROAS Calculator. To see why ROAS and profit are different things, read ROAS vs profit.

Festive discounts raise your break-even ROAS

Many sellers run a festive offer and a festive ad campaign at the same time, but a discount lowers your margin before ads, which raises the ROAS you need. Suppose you offer 15% off, so the price becomes $34. Fees fall to $3.40, but your costs stay at $20, so the profit before ads is $34 - $3.40 - $20 = $10.60. The margin before ads falls to 31.2%, and your break-even ROAS rises from 2.5x to about 3.2x. An ad that earned 2.8x at full price was profitable before the offer, and loses money after it. How much discount can you afford explains how to find the lowest safe price.

Know your break-even cost per order

There is a simpler way to look at the same number. Your profit before ads is $16 per order. That means you can spend up to $16 in ads to win one order and still break even. If your ads cost $11 per order, you keep $5. If they cost $19, you lose $3 on every sale. Compare this number with the cost per order shown in your ad account, and set a stop rule in advance, such as pausing an ad whose cost per order stays above your profit before ads for a full day.

How much stock should you buy?

Festive stock has a deadline, so the cost of getting the quantity wrong is high. Start with your break-even units. Suppose your festive campaign has $400 of fixed launch costs (photos, design and listing work) and a $1,000 ad budget, so $1,400 in campaign costs. Each order leaves $16 before those costs.

$1,400 / $16 = 87.5, so you need to sell 88 units before the campaign has paid for itself. After that, each unit is profit. The table shows what different sales levels mean.

If you do not believe you can sell at least 88 units, shrink the campaign costs, raise the price or choose a different product. You can run these numbers in the Break-even Calculator. For a fuller explanation, read Break-even analysis: how many units must you sell to cover your costs.

Is the campaign worth the cash you tie up?

Break-even tells you when you stop losing. Return on investment, or ROI, tells you how well your money worked. It matters most when you buy a lot of stock, because stock locks up cash.

Here is the same product with two different buying decisions. In both cases you sell 200 units at $40. Each sale brings back $40 minus $4 in fees and $6 for shipping and packaging, which is $30, so you get $6,000 back from 200 sales.

The extra 80 units in the first case did nothing for your sales, but they tied up $1,120 of your cash. The unsold stock is not lost, because you may sell it later, for example on Black Friday or Cyber Monday, but your money is locked until then and cannot fund other products. The E-commerce ROI Calculator works out ROI from what you invested and what came back. Use total money back, not only profit, as the calculator asks.

A four-step plan for this week

1. Work out your profit before ads for each product you plan to promote, using the Profit Margin Calculator.
2. Divide 1 by your margin before ads to get the break-even ROAS, and compare it with the ROAS you really get.
3. Decide your ad budget and stop rule, such as pausing any ad whose cost per order is above your profit before ads.
4. Calculate your break-even units and your expected ROI.
5. Order stock for the sales you can realistically make, not the best-case scenario.

Mistakes to avoid

• Judging ads by ROAS alone, without knowing the margin behind it.
• Running a discount and an ad campaign together without checking the new break-even ROAS.
• Ordering stock for your best-case sales, and then tying up cash in unsold items.
• Forgetting fixed campaign costs such as photos, design and listing work.
• Not setting a stop rule, so a losing ad keeps running while you are busy with orders.
• Using one set of numbers for every product, when the margin differs by product.

Try it with your own numbers

You can run all of these steps in a few minutes. Start with the Profit Margin Calculator for your margin before ads, then use the ROAS Calculator for your break-even ROAS, the Break-even Calculator for your units, and the E-commerce ROI Calculator for your return on investment. If you also sell festive gift boxes, read Diwali gift box pricing to set the price, shipping and returns.

Common questions