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Break-even ROAS calculator

Break-even ROAS is 1 divided by your profit margin before ad costs. If 50% of each sale is left after product, shipping and fees, ads must return $2 of revenue for every $1 spent to break even: a 2.0x ROAS. Below that each ad-driven sale loses money; above it, it makes some.

Last updated by Marketing Math Calc, published by AUSSIE-AI LTD

I want to start from

Share of each sale left after product, shipping and fees. 40 means 40%.

Price of one order, before tax.

What one order costs you to make or buy.

Shipping, payment fees, packaging.

As a share of revenue. Leave blank to see break-even only.

To see whether you are above or below break-even.

How to use it

Choose how to start. My margin takes the share of each sale left after product and order costs. Price and costs works that margin out for you from one order's selling price, product cost and other per-order costs such as shipping, packaging and payment fees.

Two optional boxes add more:

  • Profit you want after ads. A target, as a share of revenue. The calculator returns the ROAS you need to hit it.
  • Your current ROAS. It says whether you are above or below break-even and how much profit or loss each unit of ad spend produces now.

The formula

At break-even, the gross profit from ad-driven sales exactly pays for the ads. With margin m (as a decimal):

revenue × m = ad spend

Break-even ROAS = revenue ÷ ad spend = 1 ÷ m

Break-even ACoS = m × 100%

For a profit target t, also a share of revenue, the ads may only use up what is left after it:

revenue × (m − t) = ad spend

Target ROAS = 1 ÷ (m − t)

And at any ROAS r, the profit each unit of spend produces is r × m − 1.

Worked example

A product sells for $60. It costs $22 to make and $8 to ship and process, so $30 is left: a 50% margin.

  • Break-even ROAS = 1 ÷ 0.50 = 2.00x. Break-even ACoS = 50%.
  • To keep 15% of revenue as profit after ads: 1 ÷ (0.50 − 0.15) = 1 ÷ 0.35 = 2.86x.
  • The campaign is running at 2.4x. Each $1 of ads brings $2.40 of revenue and $1.20 of gross profit, so it makes $0.20 per $1 spent, which is 8.33% of revenue.

Same product with a 40% margin and a 2.2x ROAS: 2.2 × 0.40 − 1 = −$0.12. Every $1 of ads loses 12 cents, even though a 2.2x ROAS sounds healthy.

Break-even ROAS by margin

These follow directly from 1 ÷ margin. They are arithmetic, not benchmarks.

Margin before adsBreak-even ROASBreak-even ACoS
10%10.00x10%
20%5.00x20%
25%4.00x25%
30%3.33x30%
40%2.50x40%
50%2.00x50%
60%1.67x60%
70%1.43x70%
80%1.25x80%

The curve is steep at the low end. Halving a 20% margin to 10% doubles the break-even ROAS from 5x to 10x, which is why low-margin products struggle with paid ads.

What to count in the margin

Count every cost that rises with each order: the product, shipping you pay, packaging, payment processing, marketplace fees, and an allowance for returns if they are common. Leave out fixed costs such as rent and salaries; those belong in a full profit-and-loss view, not in the per-order margin that ad spend has to clear. If you pay an agency a percentage of ad spend, add it to the ad spend instead.

One-off sale or a customer for life

Break-even ROAS assumes the first order has to pay for the ad. If customers come back and buy again without more ad spend, you can afford a lower first-order ROAS. That is a deliberate bet on customer lifetime value, and it is worth writing down how long the payback takes before making it.

How this calculator handles your numbers

The margin is worked out as an exact fraction from your price and costs, so a $60 price with $30 of costs gives exactly 50%. ROAS results show two decimals with an x, money and percentages two decimals, rounded half away from zero. A margin of zero or less, a margin above 100%, or a profit target at or above the margin cannot produce a sensible ROAS, and the calculator says so instead.

Questions

How do you calculate break-even ROAS?

Divide 1 by your profit margin before ad costs, written as a decimal. A 25% margin gives 1 ÷ 0.25 = a 4x break-even ROAS.

What is break-even ACoS?

It equals your margin before ad costs. With a 30% margin, you break even when ad spend is 30% of ad-driven sales. Amazon Ads' own guide makes the same link: to stay profitable, ACoS has to be lower than your profit margin.

What ROAS do I need to make a profit?

Above break-even. For a set profit, use 1 ÷ (margin − target profit). With a 50% margin and a 15% profit target, that is 1 ÷ 0.35 = 2.86x.

Should break-even ROAS use revenue with or without tax?

Without sales tax or VAT, because that money is not yours to keep. Make sure the ROAS you compare it with uses revenue on the same basis.

Why is my ROAS above break-even but I am not making money?

Usually because something is missing from the margin, such as returns, discounts, free shipping or fees, or because fixed costs are not covered yet. Break-even ROAS only covers the costs that come with each order.

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