Break-even ROAS calculator
Break-even ROAS calculator
Build the margin from an order instead
Opening this uses a simplified margin estimate. The return rate reduces the pre-return contribution proportionally; retained fees and return handling need a separate calculation.
Break-even ROAS
3.33
Break-even ROAS is 1 divided by the pre-ad margin rate. With contribution margin, it covers the variable costs in that definition and advertising, before fixed costs and required profit. A gross-margin input covers only the costs included in gross margin.
Why the margin input is the whole calculation
Use revenue and costs on the same tax, discount and refund basis. Include the variable costs relevant to your orders, such as payments, fulfilment and shipping subsidies. The percentages below are illustrative inputs, not industry averages.
| Gross margin | Pre-ad contribution margin | |
|---|---|---|
| Illustrative margin | 45% | 30% |
| Break-even ROAS | 2.22 | 3.33 |
At ROAS 2.8, a campaign covers goods and advertising under the first definition, but fails to cover the broader cost set under the second. The contribution-margin guide explains the cost categories.
Break-even ROAS at common margins
These are arithmetic scenarios using pre-ad contribution margin. A positive result remains before fixed costs.
| Margin | Break-even ROAS | At ROAS 4.0 |
|---|---|---|
| 10% | 10.00 | Below the threshold |
| 20% | 5.00 | Below the threshold |
| 25% | 4.00 | At the threshold |
| 30% | 3.33 | Above the threshold |
| 40% | 2.50 | Above the threshold |
| 50% | 2.00 | Above the threshold |
| 60% | 1.67 | Above the threshold |
What this number does not tell you
The detailed inputs are a simplified estimate. The return adjustment multiplies the pre-return contribution by the share of orders kept. It does not separately model retained payment fees, return shipping, damaged goods or fixed transaction fees. If those are material, calculate the complete margin separately and enter it in the main margin field.
The result inherits the revenue and attribution definitions you enter. It does not show which purchases the ads caused, guarantee that extra spend will earn the same return or account for later purchases not included in the input. CAC payback follows cohort contribution over time.
Set a target above break-even to cover fixed costs, required profit and uncertainty. Use POAS and ROAS for the profit definitions and ad measurement for reconciling the data.
Common questions
What is break-even ROAS?
Break-even ROAS is 1 divided by the pre-ad margin rate. At 25% contribution margin it is 4.0, before fixed costs. A gross-margin calculation leaves other variable costs outside the result.
How do you calculate break-even ROAS?
Divide 1 by the margin expressed as a decimal. For 40%, 1 ÷ 0.40 = 2.5. Use the same revenue definition for margin and ROAS.
Should I use gross margin or contribution margin?
Use pre-ad contribution margin to include the variable costs relevant to acquisition. If only gross margin is available, label the threshold as incomplete and add the missing costs before setting a spending limit.
Is a 4.0 ROAS good?
At 25% pre-ad contribution margin, ROAS 4.0 covers that cost set and advertising. At 40% it leaves a surplus before fixed costs; at 10% it falls short. Judge the result against the cost definition and profit target.
Does break-even ROAS account for returns?
Only to the extent included in your margin. The detailed form applies a simplified proportional return adjustment. Calculate actual refund and unrecoverable return costs separately when that approximation is unsuitable.
See it on your data
In Loyalz the margin behind break-even ROAS comes from one cost form: gross margin, payment fee, shipping and packaging per order, plus an optional return rate. Until it is filled in, Loyalz computes no profit.
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