Break even ROAS calculator
The minimum return on ad spend before your ads start losing money, the most you can pay to win an order, and the ROAS you need to hit your profit target.
Profitable on paper, short on cash?
Ads are paid today, inventory was paid months ago, and payouts arrive days later. I build 12 month cash and inventory forecasts for ecommerce brands, from $500, so you know how hard you can push spend.
Request a free CFO DiagnosticWhat break even ROAS means
ROAS (return on ad spend) is revenue from ads divided by what the ads cost. A 3x ROAS means $3 of sales for every $1 spent. But revenue is not profit. Each order also carries product cost, shipping, payment fees and returns. Break even ROAS is the point where what is left of an order after those costs exactly pays for the ad.
To make a profit after ads, subtract your target margin first:
Worked example
An $80 average order with $24 of product, $8 of shipping and fulfillment, card fees of 2.9% plus $0.30, and 5% for returns and app fees.
| Order value | $80.00 |
| Product, shipping, fees and returns | −$38.62 |
| Contribution margin | $41.38 (51.7%) |
|---|---|
| Break even ROAS (80 ÷ 41.38) | 1.93x |
| Max you can pay per order | $41.38 |
| ROAS for 10% profit after ads | 2.40x |
At a 3x ROAS this brand keeps about 55 cents of contribution for every ad dollar. If the ad platform reports 1.8x, every order it drives loses money, even though revenue is growing.
Why platform ROAS can mislead you
Attribution counts some sales twice
Meta, Google and TikTok each claim credit for the same customer. Add up the revenue they report and it often exceeds your actual sales. Check blended ROAS too: total revenue divided by total ad spend across all channels.
Discounts and returns come later
Platforms report revenue at the moment of purchase. Refunds, chargebacks and discount codes reduce it afterwards. Use order value after discounts and include a returns rate, as this calculator does.
Profit is not cash
A campaign can beat break even ROAS and still drain your bank account. You pay for ads within days, paid for the inventory weeks or months earlier, and receive payouts on a delay. Scaling spend fast before a big inventory buy is a classic way to run out of cash while profitable.
Frequently asked questions
What is break even ROAS?
Break even ROAS is the return on ad spend at which an order exactly covers its variable costs and the ad that brought it in. It equals 1 divided by your contribution margin percentage. Below it, every ad driven order loses money.
What is a good ROAS for ecommerce?
There is no universal good ROAS. A brand with a 70% contribution margin breaks even at 1.43x, while one with a 30% margin needs 3.33x. Compare your ROAS with your own break even and target ROAS, not with an industry average.
Should I include fixed costs like salaries and rent?
No. Break even ROAS uses only costs that rise with each order. Fixed costs are covered by the profit above break even, which is why the target margin input exists.
Does break even ROAS account for repeat purchases?
No, it looks at the first order only. If customers reliably buy again, you can accept a lower first order ROAS, but only if you can fund the gap in cash until the repeat orders arrive.