Break-Even ROAS Calculator
The ROAS you need to not lose money. Most teams target ROAS without ever computing this — easy way to lose 6 figures.
Revenue minus all variable per-unit costs (COGS, shipping, processing, fulfillment).
Cushion for operating costs + testing. 20–40% is typical.
Result
Below this, ads lose money even before fixed costs.
30% above break-even. Use this as the target for your performance campaigns.
For every $1 in ads, you keep this much in margin after the cost of goods.
Why this number is the most important in your account
If you only know one number about your ad account, it should be break-even ROAS. Without it, you can’t evaluate whether a 4.0x ROAS is amazing or terrible — and the answer is genuinely different for different businesses.
Worked example: ecommerce
Average order value $80. COGS $35. Shipping + processing $8. Returns provision 3% ($2.40). Gross margin = ($80 − $35 − $8 − $2.40) / $80 = 43%. Break-even ROAS = 1/0.43 = 2.33x. With a 30% safety buffer, target ROAS = 3.03x. Anyone bragging about a 4.0x is doing fine; anyone celebrating a 2.5x is running an unprofitable account.
Worked example: SaaS
Annual contract value $1200. Gross margin 80%. Break-even ROAS = 1.25x. With a 50% safety buffer (SaaS has higher fixed costs as a share of revenue), target ROAS = ~1.9x. SaaS rarely thinks in ROAS — they think in CAC payback months — but the math is the same.
FAQ
What is break-even ROAS?⌄
The minimum return on ad spend at which gross profit equals ad spend (zero net contribution). Anything above is profit; anything below is loss. Formula: 1 ÷ gross margin %.
What's a 'good' ROAS to target?⌄
Aim for at least 1.3–1.5x your break-even ROAS to leave room for operating costs and contingency. So at a 25% margin (4.0x break-even), target ~5.5–6.0x. At a 70% margin (1.43x break-even), target ~2.0–2.5x.
Should I include shipping and payment-processing fees in my margin?⌄
Yes — for ROAS purposes, "gross margin" should be revenue minus all variable costs that scale with the sale: COGS, shipping, payment processing, returns provision, fulfillment per-order. Don't include fixed costs (rent, salaries) — those aren't per-unit.
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