What is break-even ROAS?

The return on ad spend at which a sale covers its product, fulfillment and fee costs plus the ad spend, with nothing left over. It equals one divided by your contribution margin before advertising.

Any ROAS comfortably above your break-even ROAS. A brand with a 60% margin breaks even at about 1.67x, while a brand with a 25% margin needs 4x just to break even.

How do I set target ROAS in Google Ads?

Use the target ROAS from this calculator as a starting point for Target ROAS bidding, make sure conversion values reflect real revenue, and adjust once you see results by product or campaign.

Should I use ROAS or MER?

Both. ROAS judges a campaign by the sales a platform attributes to it; MER (total revenue divided by total ad spend) shows whether advertising as a whole is paying off.

Is any of my data stored?

No. The calculator runs in your browser and nothing is sent anywhere.

Free tool

Break-even ROAS calculator.

Calculate the minimum return on ad spend that keeps an e-commerce sale profitable, and the target ROAS that leaves the profit you want, from your own margin.

Step 1 of 2

How can we help you get found?

Then your name and website.

Average order value

Contribution margin before ad spend

Revenue minus product cost, shipping, payment and marketplace fees, and returns, as a share of revenue.

Profit you want to keep

% of revenue

Break-even ROAS

1.82x

Below this, every attributed sale loses money after ad spend.

Target ROAS

2.50x

Keeps 15% of revenue as profit.

Break-even cost per purchase

$46.75

Target cost per purchase

$34.00

Formula: break-even ROAS = 1 ÷ contribution margin; target ROAS = 1 ÷ (margin minus profit goal). Platform ROAS counts the sales each platform claims, so check blended results (total revenue ÷ total ad spend) against your store too.

How it works

The method.

Return on ad spend is revenue divided by ad spend. Whether a given ROAS makes money depends entirely on margin: a 3x ROAS is profitable at a 50% margin and loses money at 25%.

Break-even ROAS is one divided by your contribution margin before advertising. To keep a profit, subtract the profit share you want from the margin first, then divide one by what is left. The same math gives the most you can pay per purchase.

Count every variable cost in the margin: product cost, shipping, payment and marketplace fees and returns. Platform-reported ROAS counts the sales each platform claims, so check blended results against your store as well.

Questions

About this tool.

What is break-even ROAS?: The return on ad spend at which a sale covers its product, fulfillment and fee costs plus the ad spend, with nothing left over. It equals one divided by your contribution margin before advertising.
What is a good ROAS?: Any ROAS comfortably above your break-even ROAS. A brand with a 60% margin breaks even at about 1.67x, while a brand with a 25% margin needs 4x just to break even.
How do I set target ROAS in Google Ads?: Use the target ROAS from this calculator as a starting point for Target ROAS bidding, make sure conversion values reflect real revenue, and adjust once you see results by product or campaign.
Should I use ROAS or MER?: Both. ROAS judges a campaign by the sales a platform attributes to it; MER (total revenue divided by total ad spend) shows whether advertising as a whole is paying off.
Is any of my data stored?: No. The calculator runs in your browser and nothing is sent anywhere.

More free tools

Get in touch

Want us to run the numbers on your account.

Send a short brief. A senior strategist reads it and will be in touch with what we would fix first.

Phone(866) 3-Theory Emailt@theoryroad.com

ClientsAcross the US

Thanks. We have it.

A senior strategist will be in touch by email or phone.