How does the break-even roas calculator work?
Borrowed from Accounting: Break-even ROAS = 1 / gross margin
Gross margin is the share of each sale left after product costs. Ad spend has to come out of that share, so the lower the margin, the higher the ROAS you need.
Worked example
A US retailer has a 40% gross margin, so break-even ROAS = 1 ÷ 0.40 = 2.5. Any campaign above 2.5 earns profit before other overhead.
How should I read my result?
Break-even ROAS is above 4. Ads are hard to justify unless repeat purchases are common.
Break-even ROAS runs from 1.7 to 4. Most retail and services fall here.
Break-even ROAS is below 1.7, typical of software and digital goods.
Embed this calculator
Questions about break-even roas calculator
Should shipping and fees count in margin?
Yes. Include any cost that scales with each sale, such as shipping and payment fees.
Does break-even include repeat purchases?
No. If customers buy again, your real break-even is lower. Use LTV for that view.
How does it differ from target ROAS?
Target ROAS sits above break-even and leaves room for overhead and profit.