What is a good break-even ROAS?
There is no good one. A store with a 30% contribution margin breaks even at 3.33x and a store with a 60% margin breaks even at 1.67x, and neither is doing better than the other.
Break-even ROAS Calculator
The return on ad spend where a campaign stops costing you money. Everything below that line is a campaign you are paying to run.
Enter your margin and see the ROAS a campaign has to clear before it pays for itself. Example values are included to show how each input affects break-even ROAS.
Everything here is worked out in your browser. Nothing you type is sent anywhere, and there is no account to make.
%
What the product costs you, as a share of the order value.
%
Shipping, payment fees, pick and pack. Anything that grows with orders.
%
Optional. Turns the ROAS figure into a cost per order you can act on.
%
Optional. Measured against gross revenue, not against margin.
Optional. Turns the answer into a spending ceiling for the month.
Result
The numbers below are an example so the tool opens working. Replace them with yours.
How the number is worked out
- ROAS here means what the ad platform reports: gross revenue divided by spend. Contribution is worked out after returns, because a returned order is revenue that never contributed anything.
- Set your target ROAS above break-even so the campaign also contributes to fixed costs and profit. Sitting on it means the campaign pays for itself and nothing else, so every fixed cost in the business is still unpaid.
What comes out
You will see
- Break-even ROAS, the figure a campaign has to clear before it pays for itself
- Contribution margin per order, in money rather than a percentage
- Break-even cost per acquisition at your order value
- The ROAS a net profit target needs, when you enter one
- The most you can spend in a month against a revenue target
- A warning when a cost is left blank, because a blank cost is treated as zero
How to use it
Three steps, and the third one is the point
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Put in what an order costs you
Cost of goods as a share of the order, then the variable costs that grow with orders: shipping, payment fees, pick and pack.
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Add returns and order value
A returned order is revenue that never contributed anything, so the return rate moves this number. Order value turns the ROAS into a cost per order.
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Set a profitable ROAS target
The break-even figure is where the campaign pays for itself and nothing else. Enter a net profit target to see the ROAS that funds the business.
What break-even ROAS is
Return on ad spend is what the ad platform reports back: gross revenue divided by what you paid to get it. A 4x ROAS means four pounds of revenue for every pound of spend.
Break-even ROAS is the point where that revenue exactly covers the cost of the goods and the cost of the ads, and leaves nothing over. It is one divided by your contribution margin. A store keeping 30p of every pound breaks even at 3.33x. A store keeping 50p breaks even at 2x.
This is why two stores can report the same ROAS and only one of them is making money. The number on the platform is the same. The floor underneath it is not.
Costs commonly missed in break-even ROAS
The arithmetic is one division. The part people get wrong is what goes into the divisor, and it goes wrong in the same three places every time.
Shipping and payment fees get left out, because they feel like overheads rather than order costs. They are not: they grow with every order, so they belong in the margin. Returns get left out, because the refund lands in a different month from the sale. And the profit target gets applied to margin instead of to revenue, which quietly halves it.
The calculator includes shipping, payment fees, returns, and profit targets, and warns you when an input is blank.
The tool
What this one does
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Counts returns against contribution
A refunded order contributed nothing, so it is removed before the margin is worked out rather than after.
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Separates the floor from the target
Break-even and the ROAS your profit target needs are two different rows, because sitting on the first one is not a result.
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Turns ROAS into a cost per order
A ROAS figure is hard to buy media against. Give it an order value and it becomes a cost per acquisition you can put into a bid.
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Measures profit against revenue
A net profit target is applied to gross revenue, not to margin. Applying it to margin is the most common way this calculation comes out too generous.
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Says when an input is missing
Leave other variable costs blank and the tool treats them as zero and tells you so. Most stores sit between 5% and 15%, and that band moves the answer more than people expect.
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Refuses an impossible target
Ask for a net profit above what is left after costs and the tool says no ROAS reaches it, instead of printing a number that cannot happen.
Reading the result
What each line is telling you
- Break-even ROAS
- The floor. Below it the campaign is costing you money to run, whatever the platform is reporting.
- Contribution margin per order
- What one order leaves behind in money. This is the figure that pays for the ads, the salaries and everything else.
- Break-even CPA
- The same floor expressed as a cost per order. Easier to compare against what you are paying per purchase.
- Target ROAS
- What the campaign has to return for the business to keep the profit you asked for. This is the number to hold the account to.
- Maximum monthly ad spend
- Against a revenue target, the most you can spend and still break even.
The calculation is only the start
of the diagnosis.
We look at your search visibility across Google and the answer engines, and tell you what is costing you orders. No charge for the first look.
In practice
What you can do with it
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Set a floor before a campaign launches
Work out the break-even figure first, then decide whether the market clears it. Doing it the other way round means learning it from a bad month.
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Sanity check a target ROAS someone handed you
If the target is below break-even ROAS, the campaign will lose money.
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Price a discount before you run it
A 20% off code moves the margin, which moves the floor. Run the numbers with the discounted margin and see where the campaign has to land.
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Compare two product lines fairly
A high margin line and a low margin line reporting the same ROAS are not performing the same. This is where that shows up.
Questions
Break-even ROAS Calculator questions
Should I use the ROAS the ad platform reports?
Yes. Use the ROAS your ad platform reports because this calculator uses the same definition: gross revenue divided by spend. Platforms attribute differently from each other, so a Meta ROAS and a Google ROAS are not the same measurement even when they carry the same name.
Does this include VAT or sales tax?
Work in the same basis throughout. If your order values are shown including tax, your cost percentages need to be against the same figure. Mixing the two is the quickest way to a margin that looks better than it is.
Where do fixed costs go?
Nowhere in this calculation. Break-even ROAS covers order costs and ad costs only. Rent, salaries and software are paid out of whatever contribution is left above the line, which is why sitting on break-even is not a result.
My return rate changes by season. Which one do I use?
Use the rate for the period you are planning to spend in. A calculation run on an annual average will be wrong in both directions across the year, and most wrong in the months where the spend is heaviest.
Is my data sent anywhere?
No. The whole calculation runs in your browser. There is no account, no upload, and nothing typed here reaches a server.
The rest of the set
Fifteen more, all free, all in the browser
- CPM Calculator Work out what a thousand impressions costs, or what a budget buys at a given CPM.
- CTR Calculator Clickthrough rate from clicks and impressions, or the impressions a target needs.
- Conversion Rate Calculator Conversion rate from visitors and conversions, with revenue per visitor beside it.
- ROAS Calculator Return on ad spend, the ACoS behind it, and whether your margin leaves any profit.
- CPC Calculator What one click costs, and what it costs by the time it becomes an order.
- CPA Calculator Cost per acquisition from media spend, and the ceiling your margin allows.
- CAC Calculator What winning a customer really costs, including the parts a platform cannot see.
- ARR Calculator Annual recurring revenue, with the net new figure that shows the direction.
- AOV Calculator Average order value, and what a target is worth against the same order count.
- Cost Per Lead Calculator What an enquiry costs, and what it costs once the unqualified half is priced in.
- llms.txt Generator Build an llms.txt file that tells AI crawlers which pages on your store matter.
- LTV Calculator Work out what a customer is worth over time, so you know what you can pay to win one.
- Schema Markup Generator Generate the JSON-LD a product, article or FAQ page needs, ready to paste.
- CRO ROI Calculator See what a conversion rate change is worth against the traffic you already have.
- Hreflang Generator Produce the hreflang tags a multi-country store needs, without the usual mistakes.
Break-even ROAS is calculated from your margin. Results above break-even contribute profit; results below it lose money. Recalculate whenever your costs change.
Where this comes up