Break-Even ROAS Calculator
Calculate the exact ROAS you need to break even after all costs
Calculate Break-Even ROAS
ROAS Is The Most Misunderstood Metric In Ecommerce
Every ad platform will happily tell you your ROAS. Facebook says 3.2x. Google says 4.1x. TikTok says 2.8x. Great numbers, right? Wrong. Those numbers tell you nothing about profit, and optimizing for platform-reported ROAS is how you scale into bankruptcy.
ROAS measures revenue generated per dollar spent on ads. But revenue is not profit. A 4x ROAS sounds impressive until you realize your margins are so thin that you're still losing money on every sale. This is the trap that kills profitable brands.
Why Platform-Reported ROAS Does Not Equal Profit
Platform ROAS ignores everything that actually costs you money. It doesn't account for COGS. It doesn't include platform fees. It doesn't factor in refunds. It's a vanity metric designed to make your campaigns look better than they are.
Here's the reality: if your product has a 40% gross margin and you're paying 3% in fees with a 10% refund rate, you need a minimum 2.2x ROAS just to break even. Anything below that, and you're burning cash. But Facebook will happily spend your budget at 1.8x ROAS because it looks "efficient" on their dashboard.
Break-Even ROAS Formula In Plain Language
Break-even ROAS = Price / (Gross Margin - Platform Fees - Refund Costs)
This formula tells you the minimum ROAS required to cover your costs and avoid losing money. It's not sexy, but it's real. If your actual ROAS is below this number, you're losing money on every sale, regardless of what your ad dashboard says.
Why Margins Matter More Than Traffic
You can drive all the traffic in the world, but if your margins are too thin, you'll never be profitable at scale. A 20% margin product needs dramatically higher ROAS than a 60% margin product. This is why premium brands with fat margins can afford aggressive ad spend while commodity sellers struggle.
Improving your margin by 10 percentage points can cut your required ROAS by 30-40%. That's the difference between struggling to find profitable campaigns and having room to test and scale aggressively. Margin is leverage.
How Different Ad Platforms Deliver ROAS Differently
Facebook excels at prospecting but requires higher ROAS targets due to higher CPMs. Google brand campaigns deliver low-hanging fruit with high ROAS but limited scale. TikTok offers cheap impressions but inconsistent conversion rates. Each platform has a different cost structure, and your break-even ROAS should inform how you allocate budget.
Understanding break-even ROAS by platform helps you make smarter decisions about where to scale and where to pull back. It's the difference between guessing and knowing.
Frequently Asked Questions About Break-Even ROAS
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 reasons include: inaccurate attribution (iOS 14+), high CAC from competitive auctions, poor ad creative, misaligned targeting, or seasonality. Also check if you're accounting for all costs—many founders forget platform fees and refunds when calculating target ROAS.
How do I calculate ROAS for different ad platforms?
Use the same formula: ROAS = Revenue / Ad Spend. However, each platform (Google Ads, Meta Ads, TikTok) may report differently. For accurate calculation, track actual revenue in your store analytics and divide by the ad spend from each platform. Don't rely solely on platform-reported ROAS.
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.