ROAS Break Even Calculator
Find the exact return on ad spend you need to cover your costs. No more guessing, know your number before you spend.
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How to guide
What Is Break Even ROAS and Why Does It Matter?
ROAS (Return on Ad Spend) measures how much revenue you generate for every dollar you spend on advertising. A ROAS of 3× means you earn $3 in revenue for every $1 spent.
But ROAS alone doesn't tell you if you're making money — it depends entirely on your margins. A 3× ROAS is profitable for a brand with 60% margins, but it's a losing campaign for a brand with 25% margins.
Break even ROAS is the specific ROAS at which your ad spend is exactly covered by the gross profit from those sales. Below it, you're losing money on every sale. Above it, you're printing margin.
#3 Confirm store sales data
The Break Even ROAS Formula
What Should Your Target ROAS Be?
• Gross Margin = (Selling Price − COGS) ÷ Selling Price
• Break Even ROAS = 1 ÷ Gross Margin
Example: You sell a product for $80. Your cost (including manufacturing, shipping, and packaging) is $24. Your gross margin is 70%. Your break even ROAS is 1 ÷ 0.70 = 1.43× .
That means for every $1,000 you spend on ads, you need to generate at least $1,430 in revenue just to cover your product costs. Any ROAS above 1.43× means you're profitable on that campaign.
#4 Copy to your store
What Should Your Target ROAS Be?
Break even ROAS is your floor, not your goal. Most experienced media buyers aim for 2–4× their break even ROAS as a target, depending on:
• Overhead costs — Agency fees, software, team salaries all eat into margin
• Customer LTV — If customers repurchase, acquiring at break even can still be profitable
• Growth stage — Early-stage brands may accept tighter margins to acquire customers and gather data
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Frequently Asked Questions
What costs should I include in COGS?
Include everything that varies directly with each unit sold: manufacturing cost, packaging, shipping to customer, payment processing fees (typically 2–3%), and return/refund costs. Don't include fixed costs like salaries or rent, those are overhead, not COGS.
My ROAS is above break even but I'm still not profitable. Why?
Break even ROAS only accounts for the cost of goods. You still have overhead: ad agency fees, Shopify subscriptions, warehouse costs, salaries, and more. Your "true" break even ROAS needs to cover all operating expenses. Use the optional fields above to calculate net profit including ad spend.
What's a good ROAS for Facebook and Google ads?
There's no universal benchmark, it depends entirely on your margins. A 2× ROAS could be great for a high-margin software company and terrible for a low-margin dropshipper. Calculate your break even ROAS first, then aim for 2–3× that as your target.
How does customer lifetime value (LTV) affect break even ROAS?
If your customers repurchase, your first-purchase break even ROAS can be lower than your gross margin alone suggests. For example, if a customer generates $200 in profit over their lifetime but you acquire them at break even on the first $50 order, you're still profitable. Factor in LTV when setting ROAS targets for retention-heavy products.
How is ROAS different from ROI?
ROAS = Revenue ÷ Ad Spend. ROI = (Profit − Investment) ÷ Investment. ROAS is a revenue multiplier; ROI measures actual profit return. You can have a high ROAS but low ROI if your margins are thin. Use ROAS to judge campaign efficiency, but always track ROI to measure actual business impact.
