Free tool
Break-even ROAS calculator
The short answer
Break-even ROAS is 1 divided by your margin before ad spend. At a 40% margin you need $2.50 of revenue for every $1 of ads just to break even on the first order; to keep 10% of revenue as profit you need 1 / (40% minus 10%), or 3.33.
On this page 6 sections
Break-even ROAS
Before ad spend
Break-even ROAS
2.50x
ROAS for target profit
3.33x
Max cost per order
$32.00
Profit per $1 at your ROAS
$0.20
At a 3.00x ROAS each ad dollar returns $0.20 of profit after product costs.
First-order view. If customers buy again, the ROAS you can afford on the first order is lower; see the LTV to CAC calculator.
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The formulas
- Break-even ROAS = 1 / margin, where margin is what is left of revenue after product cost, shipping, payment fees and discounts, before ads.
- Target ROAS = 1 / (margin minus the profit share you want to keep).
- Maximum cost per order = average order value x margin.
- Profit per ad dollar = ROAS x margin minus 1.
What counts in the margin
Include every variable cost of an order: the product, packaging, shipping you pay, payment processing, marketplace or app fees, and the average cost of returns. Leave out fixed costs such as rent and salaries; they are covered by the profit you keep.
First order versus lifetime
This is the first-order view. If customers buy again, you can afford a lower ROAS on the first order and still profit over their lifetime. Work out what a customer is worth with the LTV to CAC calculator, and be honest about repeat rates.
ROAS in GA4 and ad platforms
Ad platforms report ROAS using their own attribution, which often credits the ad for orders that would have happened anyway. Check against your store's orders and a holdout or geography test before raising budgets on platform ROAS alone. See why GA4 numbers don't match.
Questions
- What is a good ROAS?
- Any ROAS above your break-even ROAS is profitable on the first order. A store with a 50% margin breaks even at 2.0; one with a 25% margin needs 4.0. There is no universal good number.
- Is ROAS the same as ROI?
- No. ROAS is revenue divided by ad spend. ROI subtracts costs: profit after product costs and ad spend, divided by ad spend. A ROAS of 3 at a 30% margin is a loss.
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