Free tool
Break-even ROAS calculator
Find the exact ROAS where your ads stop losing money. Enter your costs, and see whether your current ROAS clears the line.
Your costs (% of revenue)
Contribution margin: 46%
Break-even ROAS
Your ROAS is above break-even - profitable
- Contribution margin
- 46%
- Below this ROAS, ads lose money
- 2.17×
The break-even ROAS formula
Break-even ROAS = 1 ÷ contribution margin. Your contribution margin is what survives each sale after COGS, shipping and returns. The thinner your margin, the higher the ROAS you need just to break even - which is exactly why two brands with the same ROAS can have opposite profitability.
How to calculate break-even ROAS - step by step
- Work out your contribution margin. Take a typical order and subtract COGS, shipping, payment fees and an allowance for returns. Example: £60 AOV − £22 COGS − £5 shipping − £3 fees and returns = £30 left, a 50% margin.
- Divide 1 by that margin. 1 ÷ 0.50 = a break-even ROAS of 2.00×. Every £1 of ad spend must return at least £2 of revenue before your ads contribute a penny of profit.
- Compare it to your actual ROAS. A reported 2.4× ROAS against a 2.0× break-even is a real (if slim) profit. The same 2.4× against a 3.33× break-even (30% margin) is a loss dressed up as a win.
Break-even ROAS by contribution margin
Use this as a quick reference - or enter your exact costs in the calculator above.
| Contribution margin | Break-even ROAS | What it means |
|---|---|---|
| 20% | 5.00× | Very thin - most paid accounts cannot clear this |
| 30% | 3.33× | Tough - needs excellent creative and AOV |
| 40% | 2.50× | Workable for most DTC brands |
| 50% | 2.00× | Healthy - room to scale spend |
| 60% | 1.67× | Strong - profitable at modest ROAS |
| 70% | 1.43× | Excellent - almost any working ad is profitable |
What is a good break-even ROAS?
Lower is better. A break-even ROAS of 2.0× or under means half of every sale survives your costs, so an ordinary working campaign is profitable. Once your break-even creeps past 3.0-3.5×, the margin for error disappears: attribution noise, discounts or a soft week of creative can quietly push the account underwater. If your break-even is high, the fix is rarely in the ad account - it is pricing, COGS, shipping or AOV. Then judge actual profitability with POAS (profit on ad spend) rather than revenue ROAS.
Frequently asked questions
What is break-even ROAS?
Break-even ROAS is the return on ad spend at which your ads neither make nor lose money - everything above it is profit, everything below is a loss. It is calculated as 1 ÷ contribution margin. A 46% margin gives a break-even ROAS of 2.17×.
How do you calculate break-even ROAS?
Break-even ROAS = 1 ÷ (contribution margin %). Contribution margin is what is left of each sale after COGS, shipping and returns. If your margin is 50%, your break-even ROAS is 2.0× - you need at least £2 of revenue per £1 of ad spend just to cover costs.
What is a good break-even ROAS?
Lower is better - it means you have more margin headroom. A break-even ROAS under 2.0× (a contribution margin above 50%) gives you room to scale; above 3.5× (margin under ~29%) leaves very little slack, and small attribution errors can flip you into a loss. The number itself is set by your margins, so the way to improve it is pricing, COGS or shipping - not the ad account.
Break-even ROAS vs target ROAS - what is the difference?
Break-even ROAS is a fact about your margins: the floor below which ads lose money. Target ROAS is a choice: the floor plus the profit you want. A sensible target is usually 1.2-1.5× your break-even - e.g. a 2.0× break-even supports a 2.5-3.0× target, depending on how aggressively you want to grow.
Why does break-even ROAS matter?
It turns a vanity number into a decision threshold. Without it, you cannot tell whether a given ROAS is good or a quiet loss. Knowing your break-even point lets you set realistic targets and spot products or campaigns that look fine on ROAS but are actually underwater.
Break-even ROAS is the floor for a single channel. To judge the whole account, blend everything with the MER calculator, measure real profit with the POAS calculator, or see every metric explained in the glossary.