Break-even ROAS calculator
Before you scale ad spend, you need one number: the ROAS at which the order stops making money. Everything above it is profit, everything below it is a subsidy you are paying.
How the maths works
Break-even ROAS = revenue / profit before ad spend. A $60 order that leaves $26 after product, fees and shipping breaks even at a ROAS of 2.31. Ad spend at that ROAS is $26, which is exactly the profit, so the order makes nothing.
If you are currently at 3.5 ROAS on that order, ad spend is $17.14 and profit is $8.86. If your ROAS falls below 2.31, every order loses money.
What usually breaks the calculation
- Blended ROAS hides the losers. A campaign average of 4 can be one product at 8 and three at 1.
- Returns are not in the ROAS. If 5% of orders come back, the effective ROAS is lower than the platform reports.
- Fixed fees on small baskets. A $0.30 payment fee is trivial on a $60 order and 2% of a $15 one.
Break-even ROAS FAQ
What is break-even ROAS?
Break-even ROAS is the return on ad spend at which advertising costs exactly equal your profit before ads. Above it you make money, below it you are paying to acquire customers at a loss.
How do I calculate break-even ROAS?
Break-even ROAS = revenue / profit before ad spend. If a $60 order leaves $20 after product cost, shipping and fees, break-even ROAS is 3.0, meaning every $1 of ads has to produce $3 of revenue.
Why is my break-even ROAS so high?
Because marketplace fees plus shipping plus product cost usually eat most of the price. On a marketplace, a break-even ROAS of 4 or 5 is normal on a low-priced item, which is why paid traffic is hard for cheap products.
Should I aim exactly at break-even ROAS?
No. Break-even means zero profit. Target a ROAS comfortably above it, or you have no buffer for returns, refunds and the inevitable rise in ad costs.