Break-Even ROAS Calculator

• Break-even ROAS = 1 ÷ gross margin (as a decimal): 40% margin → 2.5x, 25% → 4.0x, 50% → 2.0x
• Gross margin here = (price − COGS − shipping − fees − payment costs) ÷ price — not just price − COGS
• A 3x ROAS campaign is losing money for any business under ~33% gross margin
• Set platform tROAS above break-even, not at it — at break-even you work for free
• Falling margins raise your break-even silently — recompute after any price or cost change

Frequently Asked Questions

What is break-even ROAS?

The return on ad spend at which a campaign makes exactly zero profit: 1 ÷ gross margin. With a 40% gross margin, $1 of ad spend needs $2.50 of revenue to cover both the ad and the product costs — so 2.5x is break-even, anything above it is profit, anything below is loss.

Is a 3x ROAS good?

Only relative to your margin. At 50% gross margin, 3x is comfortably profitable (break-even is 2x). At 33% margin, 3x is exactly break-even — you're working for free. At 25% margin (break-even 4x), a 3x campaign loses a quarter of its cost of goods on every ad-driven sale.

What margin should I use in the formula?

Contribution margin per order: price minus COGS, shipping, payment fees, platform fees, packaging, and expected returns — divided by price. Not just price minus COGS (too flattering), and not net margin after fixed costs (too harsh — rent doesn't scale with one more sale).

Should my target ROAS equal my break-even ROAS?

No — at break-even, ads generate zero profit. Set the platform target 20–50% above break-even for prospecting profit, or knowingly at/below it only when customer lifetime value justifies buying customers at first-order cost. The gap between target and break-even IS your profit margin on ad-driven revenue.

How is break-even ROAS different from break-even CPA?

Same economics, inverted lens: break-even CPA = average order value × gross margin (the most you can pay for a conversion), while break-even ROAS = 1 ÷ margin (the least revenue per ad dollar). Use CPA for lead-gen and fixed-price offers, ROAS when order values vary.