Break-Even ROAS Calculator

This break even ROAS calculator shows the lowest return on ad spend where your ads stop losing money. Put your price and product cost into the calculator above and it shows you the number. If you add your fees, refunds and the profit you want, it also gives you a target ROAS.

You may see this written as BE ROAS or BEROAS. They all mean the same thing.

How to use the break even ROAS calculator?

1. Enter your selling price and your product cost.
2. Click Add shipping, fees, refunds or a profit goal if you want a more accurate answer.
3. Add your shipping and packaging cost per order.
4. Add your payment fee. If you use Stripe or PayPal, our Stripe fee calculator and PayPal fee calculator can help you find it.
5. Add your refund rate, and the profit you want to keep, if you know them.
6. Click Calculate.

If you already know your margin, click Already know your margin? Switch here and type it in.

The table in the results shows what you would make or lose for every $100 you spend on ads at different ROAS levels. Green means profit and red means loss.

What is break-even ROAS?

ROAS means return on ad spend. It shows how much revenue your ads bring in for each dollar you spend on them. Our ROAS calculator works it out for any campaign, and our guide to what is a good ROAS covers typical numbers by platform.

Break-even ROAS is the point where the profit from your sales exactly pays for your ads. You make nothing and lose nothing. Above it, your ads make money. Below it, your ads lose money.

The break-even ROAS formula

Break-even ROAS = 1 ÷ contribution margin

Contribution margin is what is left of each sale after all the costs of that order, before you pay for ads. Write it as a decimal. A 40% margin is 0.40, so break-even ROAS is 1 ÷ 0.40 = 2.5x. You need $2.50 in sales for every $1.00 of ads.

In Excel or Google Sheets, type =1/B2 if your margin is in cell B2 as a decimal, such as 0.40.

Which margin should you use?

This is where most people go wrong. Use your margin before ad spend, but after every other cost of the order. That means:

• the cost of the product
• shipping and packaging
• payment fees
• refunds, if you want to include them

If you only take off the product cost, your margin looks bigger than it really is. Your break-even ROAS then looks lower than it really is, and you think your ads are profitable when they are not. For a full worked example with one product, read our guide to break even ROAS.

A worked example

You sell a product for $100.

• Product cost: $40
• Shipping and packaging: $8
• Payment fee (Stripe’s standard US card rate of 2.9% + $0.30): $3.20

Your profit before ads is $100 − $40 − $8 − $3.20 = $48.80. That is a 48.8% margin, so your break-even ROAS is 1 ÷ 0.488 = 2.05x.

If you counted only the product cost, your margin would look like 60% and your break-even ROAS would look like 1.67x. At a real ROAS of 1.8x you would think you were winning. You would actually be losing money on every order.

Target ROAS: how much do you need to make a profit?

Break-even only tells you where you stop losing. To keep some profit, you need a higher number.

Target ROAS = 1 ÷ (contribution margin − the profit you want to keep)

Enter both numbers as a percent of your sales, not as a dollar amount per order. With a 48.8% contribution margin and a 15% profit goal, your target ROAS is 1 ÷ (0.488 − 0.15) = 1 ÷ 0.338 = 2.96x.

This is a planning number based on your own profit goal. It is not the same thing as the Target ROAS bidding setting in Google Ads. You can use your number to help decide what to enter there, but they are two different things.

Why a 3x ROAS can still lose money?

Many people hear that 3x is a “good” ROAS. It depends entirely on your margin.

• With a 50% margin, 3x is comfortable. You break even at 2x.
• With a 33.3% margin, 3x is about break-even.
• With a 25% margin, 3x loses money. You need 4x just to break even.

A good ROAS for someone else’s store may be a losing ROAS for yours. Your own break-even ROAS always matters more than a general benchmark.

Break-even ROAS by margin

Here is a quick guide to what different margins need:

• 60% margin: about 1.7x
• 50% margin: 2x
• 40% margin: 2.5x
• 30% margin: about 3.3x
• 20% margin: 5x

The lower your margin, the higher your ROAS has to be. This is why low-margin products are hard to advertise profitably.

Break-even ACoS and break-even CPA

The calculator also shows two other numbers. Here is what they mean:

• Break-even ACoS is your ad spend as a share of your ad sales. It is simply your margin as a percentage. A 48.8% margin gives a 48.8% break-even ACoS. Amazon sellers use ACoS a lot.
• Break-even CPA is the most you can pay to win one order and still break even. It equals your profit per order before ads. If you want to work out your real cost per order, use our CPA calculator.

What break-even ROAS does not cover

Break-even ROAS tells you whether your sales cover the cost of each order and your ad spend. It does not include fixed costs such as salaries, rent or software. To plan for those, set a profit goal. How much you need depends on your expected sales and your monthly costs.

Refunds: if you enter a refund rate, the calculator treats that share of your sales as refunded. It assumes you still pay for the product and shipping on those orders. If you leave the field empty, it assumes a 0% refund rate.

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