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Break-even ROAS calculator

Break-even ROAS = 1 ÷ contribution margin. An $80 order that leaves $37.60 after product cost, shipping, payment fees and returns has a 47% contribution margin, so ads break even at a 2.13× ROAS.

Share of revenue you refund.
As a share of revenue. Used for the target ROAS.
Break-even ROAS
2.13×
Contribution per order
$37.60
Contribution margin
47.0%
Break-even CPA
$37.60
Target ROAS for your profit goal
2.70×

The formula

  • Contribution per order = AOV − product cost − shipping − AOV × fees % − AOV × returns %
  • Contribution margin = contribution per order ÷ AOV
  • Break-even ROAS = 1 ÷ contribution margin
  • Break-even CPA = contribution per order
  • Target ROAS for a profit of P% of revenue = 1 ÷ (contribution margin − P)

How to use it

  1. Use per-order averages from the last 60–90 days: average order value, landed product cost, and what you pay to pick, pack and ship.
  2. Add payment processing and the share of revenue you refund. Leave out fixed costs like rent and salaries — they do not change with one more order.
  3. Set the ROAS target in your ad accounts at or above the target ROAS, not the break-even line.

Worked example

An $80 order with $28 of product cost, $8 of shipping, 3% payment fees and 5% returns leaves $37.60, a 47% contribution margin. Break-even ROAS is 2.13× and break-even CPA is $37.60. To keep 10% of revenue as profit after ads, the target ROAS is 2.70×.

Questions

How do you calculate break-even ROAS?

Divide 1 by your contribution margin. A 50% margin gives 2×, a 33% margin gives 3×, a 25% margin gives 4×.

Is break-even ROAS the same as target ROAS?

No. Break-even ROAS leaves zero profit after ads. Target ROAS adds the profit you want on top: 1 ÷ (contribution margin − desired profit margin).

Should I use gross margin or contribution margin?

Contribution margin. Gross margin ignores shipping, payment fees and returns, which makes the break-even line look lower than it is.

What is break-even CPA?

The contribution per order: the most you can pay to acquire one order without losing money on it. If customers come back, you can afford more — that is what LTV-based targets account for.