Break-even ROAS calculator
Enter your margin. See the return on ad spend where your ads stop losing money, and a target with a safety margin. Runs in your browser, nothing is sent anywhere.
What break-even ROAS means
ROAS (return on ad spend) is revenue divided by ad spend. Break-even ROAS is the lowest ROAS at which an ad pays for the product it sells and for itself. The formula is simple:
break-even ROAS = 1 ÷ gross margin
With a 40% gross margin, break-even is 1 ÷ 0.40 = 2.5x. For every €1 you spend, you need €2.50 of revenue just to cover the product cost and the ad cost. Below that you lose money, above it you make it.
Why there is no universal “good ROAS”
A ROAS of 4x is excellent for a business with a 50% margin and a loss for one with a 20% margin, where break-even is 5x. That is why advice like “aim for 4x” misleads. Work out your own number first, then set a target above it.
How to use the result
- Set your floor. Use the break-even number as the lowest ROAS you accept on a campaign after it has had time to learn.
- Set a target. Break-even plus a safety margin leaves room for returns, tracking gaps and slow weeks.
- Compare by campaign. Different products have different margins, so each one has its own break-even.
What this calculator does not include
It uses gross margin on the first sale. It leaves out overheads such as salaries and software, and it does not count repeat purchases, which lower your true break-even if customers come back. ROAS from ad platforms can also be attributed differently from your own sales records, so treat the result as a clear floor, not a promise.
Questions
What is a good ROAS?
It depends on your margin. A good ROAS is one comfortably above your break-even ROAS. With a 40% margin that floor is 2.5x, so a target of 3x or more makes sense. With a 20% margin the floor is 5x.
Is break-even ROAS the same as target ROAS?
No. Break-even ROAS is the level where you make no profit and no loss. Target ROAS is the level you aim for, which should sit above break-even so you actually earn a profit.
Should I include VAT and shipping in the margin?
Use your margin on the price before VAT, and subtract direct costs such as the product, packaging and shipping if you pay for it. That gives the gross margin the formula needs.
Found something worth fixing?
Thirty minutes, free. I look at your numbers first and tell you honestly what I would change.