Advertising · ROAS

Break-even ROAS calculator

The exact return on ad spend you need before your ads make money, after fees, returns, and your target margin.

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What this calculator does

Before you scale any ad campaign, there is one number worth knowing: the return on ad spend at which your ads simply pay for themselves. Below it you lose money on every sale the ad brings in. This calculator finds that number for you.

It takes your order value and all your non-advertising costs, works out the profit an order makes before ads, and turns that into a break-even ROAS. It also shows the higher target ROAS you need to hit your desired margin, and the most you can afford to pay to acquire a customer. That turns a vague worry about whether ads are worth it into a hard target you can check against your dashboard.

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What is break-even ROAS?

ROAS (Return on Ad Spend) measures how much revenue you earn per dollar spent on ads. Break-even ROAS is the minimum you need so that ads don't cost you money. If your break-even is 2.5x, you must generate $2.50 in revenue for every $1 spent on ads just to cover all your costs.

How to fill it in

  • AOV — your average order value (what customers typically pay)
  • COGS — what it costs you to make or source the product
  • Shipping — what you pay to fulfill each order
  • Processing % — Stripe is 2.9%, Shopify Payments is 2.6%
  • Platform fees — monthly app costs prorated per order
  • Return rate — your typical % of orders returned
  • Target margin — set to 0 for pure break-even, or enter your profit goal (e.g. 20%)

Worked example — skincare brand on Meta

Inputs:

AOV$75.00
COGS$18.00
Shipping$6.50
Processing (2.9%)$2.18
App fees per order$1.50
Return rate (4%)$0.98
Total cost excl. ads$29.16
Gross profit$45.84

Result:

Break-even ROAS$75 ÷ $45.84 = 1.64x

This brand needs at least $1.64 in revenue per $1 of ad spend to break even. With a 20% profit target, their target ROAS rises to 2.28x. If their Meta campaigns are running at 3x ROAS, they're profitable — but if they drop to 1.5x, they're losing money on every ad dollar.

Reading the gauge

  • Green (≤2x) — great. Ads have a lot of room before they lose money.
  • Amber (2–3.5x) — watch closely. You need solid campaigns to stay profitable.
  • Red (>3.5x) — your margins are thin. Paid ads will be very hard to make work.
⚠ Note. Break-even ROAS is a planning estimate. Actual ad performance depends on platform algorithms, audience quality, creative, and many variables not captured here. Results are not financial advice. Full legal disclaimer →
Revenue
Average order value (AOV)
Your typical order total
$
Costs per order
Product / COGS
$
Shipping & fulfillment
$
Payment processing %
e.g. Stripe 2.9%, Shopify Payments 2.6%
%
Platform & app fees per order
Shopify apps, marketplace fees, etc.
$
Return / refund rate %
%
Target profit margin %
Set 0 for pure break-even, or enter your goal
%
Break-even ROAS
—
—
ROAS scale — 1x to 5x+
1x 2x 3x 4x 5x+
Gross margin
—
before ad spend
Target ROAS
—
incl. your profit goal
Max CPA
—
max cost per acquisition
Cost per order
—
excl. ad spend
ROAS scenario analysis
ROAS Ad spend per order Profit per order
Estimates only. Not financial, tax, or legal advice. Actual ROAS depends on platform, audience, creative quality, and bidding strategy — many variables not captured here. Always validate with live campaign data. Full legal disclaimer

How to use the calculator

Enter your average order value, your product cost and shipping, your payment processing percentage and any platform fee, and your return rate. Then set the target margin you want to keep after advertising. The tool shows your break-even ROAS, your target ROAS, your maximum cost per acquisition, and your gross margin. Nothing you type is saved.

A worked example you can follow

Here is the default scenario: a $75 average order with an $18 product cost, $6 shipping, 2.9% processing, a $2 platform fee, a 5% return rate, and a 15% target margin.

Worked example · $75 order

From costs to the ROAS you need

Average order value$75.00
All costs before ads−$29.38
Profit before ads (gross)$45.62
Break-even ROAS1.64x

Every advertising dollar needs to bring back about $1.64 in revenue just to break even. To also keep a 15% margin, you would need a target ROAS of about 2.18x, which means spending no more than roughly $34.37 to acquire each order. If your campaign is running below 1.64x, scaling it only loses money faster.

Break-even ROAS and ACOS, in plain terms

ROAS is the revenue you earn for every dollar you spend on ads, so a 3x ROAS means $1 of ads produced $3 of sales. ACOS, advertising cost of sale, is the same idea flipped around: your ad spend as a percentage of the sales it drove. A 2x ROAS is a 50% ACOS. Whichever your platform reports, the break-even point is the same line, and staying above it is what separates profitable scaling from expensive guessing.

The reason break-even is not simply 1x is that your ad dollar has to cover not only itself but also the product, shipping, fees, and returns on that order. The thinner your margin before ads, the higher your break-even ROAS climbs, and the less room you have to bid.

Using this to make better decisions

Check your live campaigns against your break-even ROAS before deciding to scale or cut them. If a campaign sits below break-even, more budget makes the loss bigger, not smaller. If it clears your target ROAS, it has room to grow. This is general educational guidance, not financial advice, so verify your own costs and platform fees.

Glossary of terms

New to selling online? Every term this calculator uses is defined below in plain language, with a quick example where it helps. No prior experience assumed.

ROAS (return on ad spend)
The revenue you earn for every $1 you spend on ads.Example: a 3x ROAS means $1 of ads produced $3 of sales.
Break-even ROAS
The ROAS at which an ad exactly covers its own cost and every other cost on the order, leaving zero profit. Above it you profit, below it you lose.
Target ROAS
The higher ROAS you need to hit not just break-even but your desired profit margin after advertising.
ACOS (advertising cost of sale)
Your ad spend as a percentage of the sales it generated. It is the inverse of ROAS.Example: a 2x ROAS equals a 50% ACOS.
Average order value (AOV)
The typical revenue from one order, used as the starting point for the math.
Cost per acquisition (CPA)
The most you can spend to win one order and still hit your target margin.
Gross margin
Your profit before advertising, as a percentage of the order value.
Payment processing fee
A percentage plus a flat amount taken by the card processor on each order.
Break-even
The point where revenue exactly equals cost, so profit is zero.

Frequently asked questions

What is a good ROAS?

There is no universal number. A good ROAS is any figure above your break-even ROAS, which depends entirely on your margins. This calculator finds your specific break-even and target figures so you know what good means for your product.

Is break-even ROAS the same as 1x?

No. At 1x your ads only earn back their own cost, but the order still has product, shipping, fee, and return costs to cover. Break-even is always higher than 1x, and higher still when your margins are thin.

Does the calculator store the numbers I enter?

No. Everything is calculated locally in your browser and nothing is collected or transmitted.

Is this financial advice?

No. The results are estimates for your own planning, not financial or accounting advice. Verify your own costs and platform fees.

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