Break-Even ROAS Calculator

Break-even ROAS is the minimum Return on Ad Spend needed to cover all variable costs per order without profit or loss. A campaign hitting exactly your BEROAS generates zero gross margin from that ad spend — every dollar of ROAS above it is profit contribution, every dollar below is a loss.

BEROAS = 1 ÷ Gross Profit Margin. First calculate gross margin: (AOV − Variable Costs) ÷ AOV. Then divide 1 by that margin (as a decimal). A 45% margin gives BEROAS = 1 ÷ 0.45 = 2.22. Equivalently: BEROAS = AOV ÷ Gross Profit Per Order.

Include all variable costs that change with each order: product cost (COGS), outbound shipping (even if you offer "free shipping" — you pay it), payment processing fees (Shopify, Stripe, PayPal — typically 2.5–3.5%), and a returns allowance if your category has meaningful return rates. Do not include fixed costs like rent, salaries, or software subscriptions.

Break-even ROAS is the floor — it covers variable costs only, leaving zero profit. Target ROAS is the number you actually optimize toward to generate profit after all costs including overhead. Your target ROAS should always be meaningfully above break-even. This calculator suggests BEROAS × 1.4 as a starting buffer, but your actual target depends on your fixed cost structure.

Because each sale covers more of its own variable cost, you need less revenue relative to ad spend to break even. A 60% margin product (BEROAS 1.67) is far easier to run profitably than a 20% margin product (BEROAS 5.0), because the ad dollar only needs to produce $1.67 in revenue rather than $5.00. This is why margin improvement is often more powerful than ROAS optimization.

Only as a starting point. If you sell multiple products with different margins, each product or category should have its own BEROAS. Running a campaign for your lowest-margin SKU at your store-average BEROAS will likely result in losses on that campaign. Calculate per-product whenever your product mix has significantly different cost structures.