Marketing analytics

Break-even ROAS.

Enter your gross margin and a profit target. See the ROAS where ads pay for themselves, the ROAS that leaves your target profit, and your maximum cost per order.

Break-even ROAS = 1 / gross margin. At a 40% margin, break-even ROAS is 2.5 (250%): each $1 of ad spend must bring back $2.50 of revenue just to cover itself.

Advertisement

Your numbers

Your numbers
%
%
$
$

Result

Worked example

Gross margin is 40%, so break-even ROAS = 1 / 0.40 = 2.5 (250%). To keep 10% of revenue as profit after ads, you need 1 / (0.40 - 0.10) = 3.33 (333%). On a $60 order the margin is $24, so the most you can pay to win that order is $24 at break-even or $18 for the 10% target. A $1,000 ad budget needs $2,500 of revenue to break even and $3,333.33 for the target.

How it works

Break-even ROAS = 1 / gross margin. Ads break even when revenue x margin = ad spend, so revenue / ad spend = 1 / margin. This is arithmetic on your margin, not a published industry benchmark.

Target ROAS = 1 / (margin - target profit). Margin here is gross margin before ad spend, after product cost, shipping, payment fees and anything else that scales with each sale. The target profit is a share of revenue and must be lower than the margin.

Maximum cost per order = order value x (margin - target profit). Pay more than that to win a customer and the first order loses money, unless repeat purchases make up for it, which this tool does not assume.

Shopify makes the same point in plain words: an acceptable ROAS depends on your profit margins, operating costs and goals. Fixed costs such as software and staff are not in this calculation.

Sources and basis (opened 2026-10-08): Return on Ad Spend: How To Calculate Your ROAS (2026) - Shopify. Everything else is arithmetic on your inputs.

Inputs are user-entered figures. Results are planning estimates, not financial advice or a forecast of future performance. Everything runs in your browser. Nothing you type is sent or stored.

FAQ

How do I calculate break-even ROAS?

Divide 1 by your gross margin as a decimal. A 40% margin gives 1 / 0.40 = 2.5, so you need $2.50 of revenue per $1 of ads.

What margin should I use?

Gross margin before ad spend: price minus product cost, shipping, payment fees and other costs that rise with each sale, as a percent of price.

Why is my target ROAS higher than break-even?

To keep a profit, the ads must cover costs and also leave your target. A 10% target on a 40% margin means ads can only use 30% of revenue, which is a ROAS of 3.33.

Does break-even ROAS include repeat customers?

No. It looks at the first order only. If customers reorder, your real break-even can be lower, but you would need your own retention data to say how much.

Advertisement
Advertisement