How do I calculate breakeven ROAS?

Breakeven ROAS can be calculated by dividing net revenue per order by contribution margin per order. A simpler approximation is 1 divided by contribution margin percentage.

A good ROAS depends on your product margin and operating costs. The correct target is above your own breakeven ROAS and high enough to leave your desired profit margin.

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CALCULATOR

Build your real unit economics

Revenue per order

What the customer pays.

Average order value $ Average discount % Shipping charged $ Return rate %

Variable costs

Your true cost to fulfill one order.

COGS $ Outbound shipping $ Payment fee % Fixed payment fee $ Pick, pack & packaging $ Other variable costs $

Advanced inputs Optional

Return processing cost $ Returned goods recovered % Overhead per order $ Target net margin % Landing page CVR % Ad spend projection $

PROFIT SIMULATOR

Profit at different ROAS levels

ROAS	Revenue	Est. profit	Status

UNDERSTAND THE NUMBER

What is Breakeven ROAS?

Breakeven ROAS is the return on ad spend where the contribution profit generated from your sales exactly equals your advertising cost. Below that point, paid acquisition loses money. Above it, each incremental dollar of revenue can create profit.

Core formula Breakeven ROAS = Net Revenue ÷ Contribution Margin

When there are no discounts, returns or shipping revenue, this is approximately 1 ÷ contribution margin %.

Why a simple ROAS target can mislead you

A 3.0x ROAS can be excellent for a high-margin digital product and unprofitable for a low-margin physical product. Your break-even point changes with COGS, shipping, payment processing, discounting, return rates and fulfillment costs.

Quick example

If you sell an $80 product and keep roughly $32 after variable costs, your contribution margin is about 40%. Your approximate breakeven ROAS is therefore 2.5x. Spending $1,000 on ads would require around $2,500 in attributed revenue just to cover acquisition cost.

Use Breakeven ROAS with CPA and CPC

ROAS is only one side of the equation. Your contribution margin also gives you a maximum CPA. Multiply that CPA by your landing page conversion rate to estimate the CPC you can afford while staying at break-even.

FAQ

Frequently asked questions

What is a good ROAS?

There is no universal good ROAS. A useful target is one that sits above your own breakeven ROAS and still leaves enough margin to cover fixed costs and desired profit.

How is breakeven ROAS calculated?

Divide net revenue per order by contribution margin per order. A quick approximation is 1 divided by contribution margin percentage.

Should I include shipping and payment fees?

Yes. Include any variable cost that increases when an order is placed. Ignoring fulfillment and processing fees usually makes your breakeven target look artificially low.

Should returns be included?

Yes, especially for ecommerce categories with meaningful return rates. Returns can remove revenue while leaving you with shipping, processing and handling costs.

What is Max CPA?

Max CPA is the most you can spend to acquire an order before that order stops contributing profit. In this calculator it is based on contribution margin per order.

What is Breakeven CPC?

Breakeven CPC estimates the maximum cost per click you can pay at your current landing-page conversion rate while keeping acquisition near break-even.

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