Breakeven ROAS Calculator
Work out the minimum return on ad spend your Meta, Google and TikTok ads need to cover the cost of every order.
Your breakeven ROAS
Enter your revenue per order to see your breakeven ROAS.
What is breakeven ROAS?
ROAS (return on ad spend) is the revenue your ads bring in divided by what you spent on them. A ROAS of 3 means every $1 of ad spend brought in $3 of revenue.
Breakeven ROAS is the ROAS at which the money left on each sale exactly pays for the ads. Below it, every sale loses money once the products, shipping, payment fees and other costs are paid. Above it, every sale adds profit. At exactly breakeven, the campaign neither loses nor makes money.
It depends only on your margins. The larger the share of each sale that goes on costs, the higher the ROAS you need.
How breakeven ROAS is calculated
First, the calculator removes VAT or sales tax from every amount that includes it, by dividing the amount by 1 plus the rate. For example, $123 including 23% VAT is $100 before VAT.
It then adds up your costs per order and uses this formula:
Breakeven ROAS = revenue per order ÷ (revenue per order − costs per order)
Revenue minus costs is what an order leaves you before ads. It is also the most you can spend on ads to win one order and still break even, your breakeven CPA. Dividing it by revenue gives your contribution margin before ads, and breakeven ROAS is 1 divided by that margin.
If your costs are equal to or higher than your revenue, no ROAS breaks even: every order loses money before any ad spend.
How to use your breakeven ROAS
- Compare it with the ROAS in Meta Ads Manager, Google Ads or TikTok Ads Manager. A campaign below your breakeven ROAS loses money on every sale it reports.
- Treat it as the minimum. To make a profit, and to pay for fixed costs such as salaries, rent and software, your ROAS has to be higher than breakeven.
- Allow for attribution. Ad platforms count the sales they think they caused, which is often more revenue than your store actually receives from those ads, so keep some headroom above breakeven.
- Recalculate when your costs change. A new supplier price, higher shipping rates or a discount campaign all move your breakeven ROAS.
Worked example
| Revenue per order | $50.00 |
|---|---|
| Costs per order (goods, shipping, fees, other) | $30.00 |
| Left before ads (breakeven CPA) | $20.00 |
| Breakeven ROAS | 2.50 |
A store's average order brings in $50 before tax. The products cost $18, shipping and fulfilment $7, payment fees $1.50 and other costs $3.50. Each order costs $30 and leaves $20 before ads.
Breakeven ROAS = 50 ÷ (50 − 30) = 2.50. The store's ads have to bring in at least $2.50 of revenue for every $1 they cost. It can spend up to $20 on ads to win each order, its breakeven CPA, before the order loses money.
Enter these numbers in the calculator above to check the result, then replace them with your own.
Frequently asked questions
What is a good ROAS for e-commerce?
It depends on your margins. A good ROAS is far enough above your breakeven ROAS to pay for your fixed costs and leave a profit. A store with a 50% contribution margin breaks even at a ROAS of 2.0; a store with a 25% margin needs 4.0 just to break even.
Which costs should I include?
Every cost you pay on each order: the products, shipping and fulfilment, payment fees, and anything else that grows with orders, such as packaging or per-order app fees. Leave out fixed costs such as salaries, rent and software subscriptions, and leave out the ad spend itself, because breakeven ROAS is the figure your ad spend has to beat.
Should I include VAT or sales tax?
VAT and sales tax are collected for the government, so they are neither revenue nor cost for your store. If your amounts include VAT, choose the rate and the calculator removes it before working out your breakeven ROAS. US prices usually exclude sales tax, so leave the rate at None.
Why is my breakeven ROAS higher than I expected?
Breakeven ROAS rises quickly as margins shrink. At a 50% contribution margin you need a ROAS of 2.0, at 33% you need 3.0, and at 20% you need 5.0. Small increases in product costs, shipping or discounts can raise it a lot.
Does breakeven ROAS account for returns?
Only if you include them. Use your average revenue per order after refunds, and add the average cost of handling returns per order to Other costs.
Is breakeven ROAS the same as breakeven MER?
They use the same margin maths on different revenue. Breakeven ROAS applies to the revenue an ad platform reports for its own campaigns. MER (marketing efficiency ratio) divides all store revenue by all marketing spend, so it also counts sales from returning customers, email and organic search.
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