Break-Even ROAS Calculator

Enter your gross margin and the profit you want to keep. Get the ROAS your ads must clear to break even, the ROAS that hits your profit target, and your break-even CPA.

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Revenue minus cost of goods, shipping and fees, as a share of revenue.

Profit to keep after ad cost, as a share of revenue.

Optional. Gives the most one order can cost in ads.

Optional. Shows the revenue it has to return.

Break-even ROAS = 1 ÷ gross margin. Target ROAS = 1 ÷ (margin − target profit). Below break-even, every sale the ads drive loses money.
Break-even ROAS
2.50×
at a 40% gross margin
ROAS for 10% profit
3.33×
Break-even CPA
$32
Revenue to break even
$12,500

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How break-even ROAS is calculated

Break-even ROAS = 1 ÷ gross margin. At a 40% margin, each $1 of revenue leaves $0.40 to pay for the ad that drove it, so the ads have to return $2.50 for every $1 spent before the sale makes money. At a 25% margin the bar is 4.0×; at 60% it is 1.67×.

Use contribution margin, not product markup: revenue minus cost of goods, shipping, payment fees and returns. A store that quotes a 70% markup but loses 30 points to shipping and fees has a 40% margin for this sum.

Target ROAS: break-even plus profit

Profit comes out of the same margin as ad cost. To keep 10% of revenue as profit at a 40% margin, ads can take only 30%, so the target ROAS is 1 ÷ 0.30 = 3.33×. A profit target at or above the margin cannot be reached by any ROAS, and the calculator says so.

This is the number to put in a target ROAS bid strategy on Google Ads or a minimum ROAS control on Meta. Set it at break-even and the platform spends right up to the point of losing money.

Break-even CPA

The same margin caps what one order can cost. Break-even CPA = average order value × gross margin. An $80 order at a 40% margin can carry $32 of ad cost. If customers buy again, a first-order CPA above that line can still pay back, which is where LTV takes over from ROAS.

Why platform ROAS overstates the real number

Ad platforms credit themselves with sales that would have happened anyway, and two platforms often claim the same order. Hold platform-reported ROAS to a margin of safety above break-even, or compare it with incremental ROAS from a holdout test, before calling a campaign profitable.

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Questions, answered

What is break-even ROAS?

The return on ad spend at which gross margin exactly pays for the ads. Above it, each sale the ads drive makes money; below it, each one loses money. It equals 1 divided by your gross margin.

How do I calculate break-even ROAS?

Divide 1 by your gross margin as a decimal. A 40% margin gives 1 ÷ 0.40 = 2.5, so you need $2.50 in revenue for every $1 of ad spend to break even.

What is a good ROAS?

Any ROAS comfortably above your break-even. At a 50% margin, 2.0× breaks even and 3.0× keeps about 17% of revenue as profit. The same 3.0× loses money for a store with a 25% margin, whose break-even is 4.0×.

How is target ROAS different from break-even ROAS?

Break-even ROAS leaves no profit. Target ROAS adds the profit you want to keep: 1 ÷ (margin − target profit). At a 40% margin and a 10% profit target, the target is 3.33× against a 2.5× break-even.

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