Break-even ROAS calculator for ecommerce ads
A ROAS of 2 sounds good until you subtract what the product, shipping and payment fees cost. Enter your numbers to see the ROAS where your ads stop losing money, and the most you can pay for a sale.
What you pay the supplier, including inbound freight
Packaging, fulfilment, per-order app fees
Every $100 in ads has to bring in at least $190 in sales before you make any money.
- Product $15.00
- Shipping $6.00
- Fees $1.75
- Other $1.00
- Left for ads + profit $26.25
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Break-even ROAS is the return on ad spend at which ad revenue exactly covers your costs: break-even ROAS = selling price ÷ profit per order before ads. If you sell a product for $50 and keep $20 after product cost, shipping and fees, your break-even ROAS is 50 ÷ 20 = 2.5. Below 2.5 every sale from ads loses money; above it, your ads are profitable.
- Profit per order
- = price − product cost − shipping − payment fees − other costs
- Break-even ROAS
- = price ÷ profit per order
- Break-even CPA
- = profit per order
- ROAS for a target margin
- = price ÷ (profit per order − target margin × price)
- Break-even ROAS = 1 ÷ profit margin before ads. A 40% margin needs a ROAS of 2.5; a 25% margin needs 4.
- Your break-even cost per acquisition (CPA) is simply your profit per order before ads.
- Include every cost that comes with an order: product, shipping you pay, payment fees and packaging.
- Improving your conversion rate lowers your cost per sale, which raises your ROAS without touching your ads.
What ROAS and break-even ROAS mean
ROAS (return on ad spend) is the revenue your ads bring in divided by what you spent on them. Spend $100, get $300 in sales, and your ROAS is 3 (sometimes written 3x or 300%).
ROAS on its own says nothing about profit, because it ignores what each sale costs you. Break-even ROAS fixes that: it is the ROAS at which the profit from ad-driven sales exactly pays for the ads. Anything above it makes money, anything below it loses money, however good the number looks in Ads Manager.
How to calculate break-even ROAS
First work out how much you keep from one order before advertising:
- 1Start with the selling price (or your average order value if people usually buy more than one item).
- 2Subtract the product cost: what you pay your supplier or manufacturer, including inbound freight.
- 3Subtract the shipping cost you pay to send the order. If customers pay for shipping, subtract only the part you cover.
- 4Subtract payment fees, usually a percentage of the order plus a small fixed fee per transaction.
- 5Subtract other per-order costs: packaging, fulfilment, app fees charged per order.
What is left is your profit per order before ads. Divide the selling price by it and you have your break-even ROAS. For example: $50 price − $15 product − $6 shipping − $1.75 fees − $1 packaging = $26.25 profit. Break-even ROAS = 50 ÷ 26.25 ≈ 1.9.
Break-even CPA and target ROAS
Your break-even CPA (cost per acquisition) is the most you can pay in ads for one sale before you lose money, and it equals your profit per order. If you keep $26.25 per order, you can spend up to $26.25 to get that order.
Breaking even is not the goal, though. Set a target margin in the calculator (say 15% of the price) and it shows the ROAS you need to keep that margin after ads. Use that as the number to judge campaigns by.
| Margin before ads | Break-even ROAS | ROAS for 10% profit after ads |
|---|---|---|
| 60% | 1.67 | 2.0 |
| 50% | 2.0 | 2.5 |
| 40% | 2.5 | 3.33 |
| 30% | 3.33 | 5.0 |
| 20% | 5.0 | 10.0 |
How to raise your ROAS without touching your ads
ROAS depends as much on your store as on your ads. The same clicks produce more sales when the page they land on converts better, so your cost per sale drops and ROAS goes up.
- Match the landing page to the ad. If the ad shows one product, send people to that product page, not your homepage.
- Make the mobile page work. Most ad clicks from Meta and TikTok happen on phones. A slow page or a buried add-to-cart button wastes the click you paid for.
- Raise your average order value with bundles or a free-shipping threshold. A bigger order makes each sale more profitable, which lowers your break-even ROAS.
- Fix trust gaps. Ad visitors have never heard of you. Reviews, clear returns and delivery times matter more for them than for returning customers.
StorePeek checks the pages your ads send people to on desktop and mobile and ranks what is costing you sales. Your first check is free.
Frequently asked questions
What is a good ROAS for ecommerce?
There is no universal good ROAS: it depends on your margins. A store with 60% margins is profitable at a ROAS of 2, while a store with 20% margins loses money until 5. Work out your own break-even ROAS and aim comfortably above it.
Is break-even ROAS the same as break-even ACoS?
They describe the same point from opposite directions. ACoS (advertising cost of sales, common on Amazon) is ad spend divided by revenue, so it is 1 ÷ ROAS. Your break-even ACoS equals your profit margin before ads; your break-even ROAS is 1 ÷ that margin.
Should I use the product price or the average order value?
Use the average order value if customers often buy several items or add-ons, and calculate costs for an average order. Use the single product price if you run ads for one product that is usually bought alone.
Does this account for repeat purchases?
No. This is the break-even ROAS for the first order. If customers often come back and buy again, you can afford a lower first-order ROAS, because part of the ad cost is paid back by later orders. That is a lifetime value calculation, which needs your repeat purchase data.
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