Free tool
Break-Even ROAS Calculator
Enter your order economics to see the ROAS and CPA where ads stop losing money, and the ROAS to aim for once you keep a profit.
Break-even ROAS
2.00x
- Break-even CPA (per order)
- USD 40.00
- Target ROAS (20% buffer)
- 2.50x
- Target CPA (20% buffer)
- USD 32.00
How it works
Methodology
- Contribution per order = average order value × gross margin − other variable cost per order.
- Break-even CPA = contribution per order. This is the most you can spend to win one order without losing money.
- Break-even ROAS = average order value ÷ break-even CPA.
- Target ROAS = average order value ÷ (contribution × (1 − profit buffer)).
The results use first-order economics only. Repeat purchases raise what a customer is worth, so treat these as a floor, and replace the example values with your own store data.
FAQ
Calculator FAQ
What is break-even ROAS?
It is the return on ad spend where an order's contribution exactly pays for the ads that won it. The formula is average order value ÷ (average order value × gross margin − variable cost per order). Below it, each sale loses money; above it, each sale adds profit.
Why does a lower margin need a much higher ROAS?
Break-even ROAS is the inverse of your contribution margin. Halving the margin left after variable costs doubles the ROAS you need, because each dollar of revenue now covers half as much ad spend.
How is the target ROAS worked out?
The profit buffer is the share of each order's contribution you keep. Target CPA = contribution × (1 − buffer), and target ROAS = average order value ÷ target CPA. A 0% buffer gives the break-even figures.
Why does the calculator say no ROAS breaks even?
If average order value × gross margin is equal to or less than your variable cost per order, every order loses money before any ad spend. No amount of ROAS fixes that, so price, margin or per-order costs need to change first.