All Tools

Break-Even ROAS Calculator (BEROAS)

Calculate the exact ROAS you need to break even after all costs - marketers also call it breakeven ROAS or BEROAS

What is break-even ROAS?

Break-even ROAS (BEROAS) is the return on ad spend at which a campaign neither makes nor loses money. Divide 1 by your contribution margin after COGS, fees, and refunds: a product keeping 40% of each sale breaks even at 2.5x, so any campaign below that loses money.

Input Your Numbers

Calculate Break-Even ROAS

Price minus COGS, as percentage. Not sure of yours? Work it out with the Shopify profit margin calculator.

The formula

The break-even ROAS formula

Break-even ROAS = Selling price / Contribution margin per order

Contribution margin is what is left of the selling price after cost of goods, payment and platform fees, and the cost of refunds. Break-even ROAS is simply how many times over your ad spend has to come back before that margin is used up.

Selling price
What the customer pays for the product, before shipping and tax. This is the number your ROAS is measured against.
Gross margin %
The share of the selling price left after cost of goods sold. A $60 product costing $24 to make has a 60% gross margin.
Platform and payment fees %
Shopify or WooCommerce fees plus the payment processor cut, as a percentage of the selling price. For most stores this lands between 2% and 4%.
Refund rate %
The share of revenue you give back. Treated as a straight percentage of the selling price, because a refunded order returns the revenue but rarely returns the ad spend.
Contribution margin per order
Gross margin in dollars, minus fees in dollars, minus refund cost in dollars. This is the pool your advertising has to come out of.
  • When contribution margin is zero or negative, no ROAS breaks even: every order loses money before a cent of ad spend. Fix the margin first.
  • This is a per-order break-even. It does not carry your fixed costs, so hitting break-even ROAS keeps the lights on but does not pay salaries, software, or rent.
  • Shipping is treated as part of cost of goods here. If you charge shipping separately and it fully covers the cost, leave it out of gross margin.

Worked examples

Three worked examples

The same formula across three margin profiles. Notice how far the required ROAS moves: the difference between the first and second store is not the ad account, it is the returns rate.

Example 1

Healthy-margin apparel brand

A $60 t-shirt with solid margin, standard Shopify Payments fees and a low return rate. This is the profile most break-even ROAS advice assumes.

Inputs

Selling price
$60.00
Gross margin
60%
Platform and payment fees
3%
Refund rate
5%

Working

  1. Gross margin in dollars: $60.00 x 60% = $36.00
  2. Platform and payment fees: $60.00 x 3% = $1.80
  3. Refund cost: $60.00 x 5% = $3.00
  4. Contribution margin: $36.00 - $1.80 - $3.00 = $31.20
  5. Break-even ROAS: $60.00 / $31.20 = 1.92

Break-even ROAS

1.92x

Every $1 of ad spend has to return $1.92 in revenue just to stand still. Contribution margin is 52% of the selling price, which leaves real room to scale above break-even.

Example 2

Footwear brand with high returns

An $80 pair of shoes at a thinner margin, with the sizing-driven return rate that fashion and footwear brands live with.

Inputs

Selling price
$80.00
Gross margin
45%
Platform and payment fees
3.5%
Refund rate
18%

Working

  1. Gross margin in dollars: $80.00 x 45% = $36.00
  2. Platform and payment fees: $80.00 x 3.5% = $2.80
  3. Refund cost: $80.00 x 18% = $14.40
  4. Contribution margin: $36.00 - $2.80 - $14.40 = $18.80
  5. Break-even ROAS: $80.00 / $18.80 = 4.26

Break-even ROAS

4.26x

Identical gross margin in dollars to the first example, but returns more than double the required ROAS, from 1.92x to 4.26x. Cutting the return rate from 18% to 10% would pull break-even back to 2.94x, which is usually cheaper than trying to buy a better ROAS.

Example 3

High-margin supplement brand

A $45 supplement with the margin profile that makes paid acquisition comfortable, and the low return rate that goes with a consumable.

Inputs

Selling price
$45.00
Gross margin
75%
Platform and payment fees
3%
Refund rate
4%

Working

  1. Gross margin in dollars: $45.00 x 75% = $33.75
  2. Platform and payment fees: $45.00 x 3% = $1.35
  3. Refund cost: $45.00 x 4% = $1.80
  4. Contribution margin: $33.75 - $1.35 - $1.80 = $30.60
  5. Break-even ROAS: $45.00 / $30.60 = 1.47

Break-even ROAS

1.47x

A 1.47x break-even leaves 68% of the selling price as contribution margin, which is why high-margin categories can outbid everyone else on the same keyword and still profit.

The Profitability Threshold

Break-Even ROAS, Explained

Return on ad spend only means something when you know the number you have to beat. Break-even ROAS is that number: the point where an ad campaign stops losing money and starts making it. Spend USD 1,000 on ads at a 2.0x ROAS and you have USD 2,000 in revenue - but if COGS, payment fees, and refunds eat 60% of that revenue, the campaign that looked profitable actually lost USD 200.

Most founders benchmark against a generic target like 3x or 4x. The honest approach is to derive the threshold from your own margin structure and judge every campaign against it. The formula and worked examples are above; this section covers how break-even ROAS differs from the target ROAS you scale toward, the other names it goes by, and how to lower it.

Break-Even ROAS vs Target ROAS

Break-even ROAS is a floor; target ROAS is a goal with profit built in. Once you know your BEROAS, set the target above it by the margin of safety you need. A store with a 40% contribution margin breaks even at 2.5x; if it wants every ad dollar to bring back USD 0.20 of profit on top, it needs a 3.0x target (1.20 / 0.40).

The distinction matters most when scaling. Pushing budgets up usually pushes marginal returns down, so a campaign can sit comfortably above break even at USD 100 a day and slip below it at USD 500 a day. Knowing the exact floor tells you when growth has turned into paying for revenue.

Breakeven ROAS, BEROAS, BE ROAS: One Metric, Many Names

You will see the same threshold written as break-even ROAS, breakeven ROAS, BEROAS, or BE ROAS depending on which community you learned it from. They all mean 1 divided by contribution margin. Whichever spelling you use, make sure the margin underneath it includes fees and refunds, not just COGS - that difference is where most miscalculated thresholds come from.

How to Lower Your Break Even ROAS

Because the threshold is 1 / contribution margin, the only lever is margin itself. Raise prices, negotiate COGS, trim refund rates with better sizing guides and product pages, or reduce payment costs. Moving a product from a 25% to a 33% contribution margin drops its break even ROAS from 4.0 to 3.0, so campaigns that were underwater at 3.5x become profitable without touching the ads.

Then measure the result on blended numbers: total store revenue divided by total ad spend, compared against a blended break-even threshold. That one honest ratio tells you whether the whole engine is profitable, independent of how any platform reports its own performance.

Common Questions

Frequently Asked Questions

What does BEROAS mean?

BEROAS is shorthand for Break-Even Return on Ad Spend - the ROAS at which an ad campaign neither makes nor loses money. The simplest formula is BEROAS = 1 / contribution margin. A product with a 40% contribution margin after fees and refunds has a BEROAS of 2.5, so any campaign returning less than 2.5x its spend is losing money.

How do I calculate break-even ROAS?

Divide 1 by your contribution margin. Work out the share of each sale left after COGS, payment and platform fees, and expected refunds, then take the reciprocal: a store keeping 45% of each sale has a break-even ROAS of 1 / 0.45 = 2.2. The calculator above does the same math and shows how the threshold moves as each cost changes.

What is a good breakeven ROAS?

A lower breakeven ROAS is better, because more of your campaigns clear the profitability bar. High-margin products (60%+ contribution margin) break even below 1.7x, while low-margin products (25-30% margin) need 3.3-4.0x just to break even. If your breakeven ROAS is above 4, most paid campaigns will struggle - improve margin or pricing before scaling ad spend.

What is break-even ROAS in ecommerce?

Break-even ROAS is the minimum Return on Ad Spend needed to cover all costs and achieve zero profit. It's calculated by dividing your price by your contribution margin (gross profit minus fees and refunds). For example, if you need $3 in revenue for every $1 spent on ads to break even, your break-even ROAS is 3.0.

What is a good ROAS for ecommerce ads?

A 'good' ROAS depends on your margins. Generally, 4:1 ROAS is considered solid, but high-margin products can be profitable at 2:1, while low-margin products may need 6:1+. Focus on beating your break-even ROAS by at least 50% to ensure healthy profits.

Why is my actual ROAS lower than my target ROAS?

Common causes include rising ad costs in competitive auctions, creative fatigue, misaligned targeting, seasonality, and platform-reported revenue that does not match what actually lands in your store. Also check how the target was built: founders who leave platform fees and refunds out of their contribution margin set targets that look achievable but sit below their true break-even ROAS.

Should I measure break-even ROAS per campaign or blended?

Blended is the more honest yardstick. Divide total store revenue by total ad spend (your MER) and compare it with a break-even threshold built from your blended contribution margin. Ad platforms each claim credit for orders in their own way, so adding up their reported ROAS figures overstates performance; blended math sidesteps the double counting entirely.

Should my break-even ROAS include shipping costs?

Yes, if shipping isn't covered by customer fees. Include shipping in COGS when calculating gross margin. If customers pay for shipping, don't count it. The key is whether shipping reduces your contribution margin per sale.

How do platform fees affect break-even ROAS?

Platform fees (Shopify ~2-3%) and payment processing fees (~2.9%) reduce your contribution margin by 5-6% total, which directly increases your break-even ROAS. A product with 40% gross margin might need 2.5 ROAS before fees, but 3.0+ ROAS after fees to break even.

More Tools

Related Calculators

📈

MER Calculator

Blended ROAS from total revenue and total ad spend across every channel

💵

Ad Budget Calculator

How much to spend on ads to hit your revenue target

💰

Product Profitability Calculator

Calculate true profit after all costs

💳

Ecommerce Fees Calculator

Calculate platform and payment processing fees

🛍️

How to track Black Friday performance

A step-by-step guide to tracking sales, ROAS and profit through BFCM