How to calculate break-even ROAS

Your break-even ROAS is the ROAS at which ads pay for themselves and nothing more. You can work it out in three steps from your price and costs.

Try it with your numbers

Break-even ROAS

1.61×

Minimum ROAS to not lose money

Break-even CPA

$62.00

Max acquisition cost

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Step 1: add up your costs per order

Add everything one order costs you except ads: the product, shipping and packaging, and the payment fee (a percentage of the price). If you refund some orders, add the share of the price you give back.

Step 2: subtract them from the price

Left for ads = Price − Costs per order

What is left is the most you can spend on ads to win that sale. This is your break-even CPA.

Step 3: divide the price by what is left

Break-even ROAS = Price ÷ Left for ads

The result is the ROAS you need just to cover your costs. Any ROAS above it is profit; below it, the ads lose money on each sale.

Questions

Can I use a margin percentage instead?

Yes: break-even ROAS = 1 ÷ margin before ads. A 40% margin gives 1 ÷ 0.40 = 2.5×. It is the same formula written differently.

Should I use the price with or without VAT?

Without, if you pay VAT or sales tax on your sales: that money isn’t yours to keep. Use the same basis for your price and your revenue.

What about discounts?