Free advertising tool

Break-even ROAS calculator

ROAS is revenue divided by ad spend. Break-even ROAS asks a more useful planning question: how much return can your order support after the variable costs required to deliver it? Use contribution margin, not revenue alone, to find that threshold, then optionally set the profit you want to retain on each order.

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Find the return needed to cover variable costs.

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What costs are included?

Contribution margin is the share left after genuinely variable order costs, before advertising. Contribution margin % = (revenue − included variable costs) ÷ revenue.

Included

Product or service variable cost/COGS
Per-order fulfillment and packaging
Shipping subsidy paid by the business
Payment processing
Marketplace or transaction fees that scale with the order
Expected refund/return allowance
Other genuinely variable per-order delivery costs

Not included

Advertising spend (the quantity being solved for)
Fixed salaries
Rent
Software subscriptions
Agency retainers
Fixed overhead
Income tax
Financing costs
Owner distributions

Worked examples

See what the threshold means.

$100 revenue · 40% margin · no target

Leaves $40.00 in contribution dollars, so the maximum break-even ad spend is an Allowable CPA of $40.00 and break-even ROAS is 2.50x.

$100 revenue · 40% margin · $10 target profit

Leaves $30.00 for advertising after retaining $10.00 per order, so the target ROAS is 3.33x.

$100 revenue · 0% margin · no target

There are no contribution dollars available to pay for advertising. The result is Undefined, not Infinity, 0x, or an implied performance promise.

How the formula works

Keep the denominator auditable.

marginRate = contribution margin ÷ 100

contribution dollars = revenue per order × marginRate

break-even ROAS = revenue per order ÷ contribution dollars

With a profit target, subtract that target from contribution dollars first. The result is the target allowable CPA, and revenue divided by that CPA is the ROAS required to retain the target. Intermediate values are not rounded; dollars and ROAS are displayed to two decimal places.

Assumptions and limitations

Use your own margin carefully.

Break-even means profit exactly zero after the included variable costs and ad spend. It is not the ROAS that guarantees profitability. The tool does not infer an industry margin or promise campaign performance.

Revenue should be net revenue retained by the business. Sales tax collected for a tax authority and pass-through shipping should not be treated as revenue unless their matching costs are also included. If revenue is already net of refunded revenue, include only non-recovered return handling or fulfillment costs in any refund allowance.

Fixed salaries, rent, software subscriptions, agency retainers, fixed overhead, income tax, financing costs, owner distributions, and advertising spend do not belong in contribution margin. Those costs may matter to a wider business model, but adding them here would change the question this calculator answers.