Free Break-Even ROAS Calculator
Work out the ROAS a campaign has to beat before it makes you any money. Enter your gross margin, or your selling price and costs, and this break-even ROAS calculator gives you the BEROAS threshold, the matching break-even ACOS, and the most you can afford to pay for an order and for a click. Add a target profit margin and it raises the bar to match.
What do you know about your margin?
What is left of each sale after the cost of delivering it. Enter 40 for 40 percent, not 0.4.
Unlocks the most you can pay per order
Unlocks the most you can pay per click
Profit you want to keep, as a share of revenue
Enter your margin, or your price and costs, and the ROAS you have to beat appears here.
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What Is Break-Even ROAS?
ROAS tells you what a campaign returned. Break-even ROAS tells you what it had to return. They are two different questions and they need two different numbers: one is a measurement taken after the money was spent, the other is a threshold you can work out before you spend anything, because it comes entirely from your own costs.
Break-even ROAS is the point where the contribution a campaign generates exactly equals what the campaign cost. Sell $100 of product at a 40% contribution margin and you keep $40; spend exactly $40 on ads to sell it and the campaign has paid for itself and produced nothing. That is 2.5x. Below 2.5x each sale destroys value; above it each sale contributes. To measure what a campaign actually returned, use the ROAS Calculator instead, then compare the result against the threshold this page gives you.
The Break-Even ROAS Formula
Break-even ROAS = 1 ÷ Contribution Margin
Break-even ACOS = Contribution Margin
Both lines say the same thing. The first counts revenue per dollar of spend, the second counts spend per dollar of revenue, and one is the reciprocal of the other. That is why the ACOS column in the table below is just the margin column repeated.
These rows are arithmetic, not benchmarks — no row is a target, and none of them says anything about whether a business at that margin is doing well.
| Contribution margin | Break-even ROAS | Break-even ACOS |
|---|---|---|
| 10% | 10.00x | 10% |
| 20% | 5.00x | 20% |
| 25% | 4.00x | 25% |
| 40% | 2.50x | 40% |
| 50% | 2.00x | 50% |
| 75% | 1.33x | 75% |
| 100% | 1.00x | 100% |
One edge case is worth stating because the calculator handles it deliberately. At a 0% contribution margin there is no break-even ROAS at all: 1 ÷ 0 is undefined, not infinite and certainly not zero, so the tool prints a dash. The break-even ACOS at that same margin is a real 0%, and the most you can pay for an order is a real $0.00 — three true zeros beside one genuinely absent figure, which is why they are shown differently.
Which Costs Belong in the Margin
The margin this calculator wants is your contribution margin: everything that goes away when you sell one more unit, subtracted from the price of that unit.
In
- Cost of goods — what you paid for the item, or what it cost to make
- Inbound freight and duty on that item
- Outbound shipping and fulfilment on the order
- Payment processing fees
- Marketplace or platform commission
- Packaging and inserts
Out
- Rent and facilities
- Salaries
- Software subscriptions
- Agency retainers
Rent, salaries, software and agency retainers are paid out of your total contribution across every order, not out of any single one. Folding them into a per-order margin sets a bar no individual sale was ever meant to clear, and produces a break-even ROAS you will never hit.
Refunds deserve a mention and not a formula. A refunded order gives you the revenue back, but it rarely gives you back the shipping you paid to send it or the payment fee you paid to take the money, and sometimes the item comes back unsellable. So a high refund rate makes your real contribution margin lower than the per-order arithmetic suggests, and your true break-even ROAS correspondingly higher. There is no honest single adjustment for that, which is why this page does not invent one — if refunds are material for you, compute your margin from a period of actual settled orders rather than from a price list.
Gross Margin vs Markup: The Reciprocal Trap
Markup and margin are both percentages, they are both about the gap between cost and price, and they are almost never the same number. Markup is measured against your cost. Margin is measured against your price.
Cost $50, price $100
- Markup = (100 − 50) ÷ 50 = 100%
- Margin = (100 − 50) ÷ 100 = 50%
- Break-even ROAS = 1 ÷ 0.5 = 2.00x
Read the 100% markup as a margin and you get 1 ÷ 1.0 = 1.00x, which says any campaign that returns more than it costs is profitable. At a $50 cost on a $100 sale, a campaign running at 1.5x is losing money on every order. Halving the true break-even is not a rounding error, it is the difference between scaling and bleeding.
If your figures are stated as markup, convert first: margin = markup ÷ (1 + markup). A 100% markup is a 50% margin, a 50% markup is a 33.3% margin, a 25% markup is a 20% margin. Or skip the conversion entirely and use the price and COGS tab above, which derives the margin from the two numbers directly and cannot be fed the wrong one.
How to Use This Calculator
- Pick the tab that matches what you know — enter a gross margin percentage if you already track one, or enter the selling price and costs of a single typical order and let the calculator work the margin out.
- Read the break-even ROAS and ACOS — that pair is the floor. Any campaign under it is losing money on every sale it wins, whatever the platform dashboard says about the trend.
- Add the optional fields you have — an order value turns the threshold into the most you can pay for an order, a conversion rate turns that into the most you can pay for a click, and a target profit margin raises all of them so the campaign clears break-even and leaves you something.
- Take the number to the campaign — put your actual revenue and ad spend into the ROAS Calculator and compare what it returns against the threshold you just worked out. That comparison, not the ROAS on its own, is what tells you whether the campaign made money.
Break-Even ROAS vs Target ROAS
A break-even number is a floor, not a plan. Treating it as the target you aim at leaves nothing for overhead, nothing for the sales the attribution model over-counted, and nothing for the campaigns that miss.
The optional target profit margin field turns the floor into a plan, and it is worth being explicit about which definition it uses, because two are possible and they give different answers.
Target ROAS = 1 ÷ (Contribution Margin − Target Margin)
At a 40% contribution margin with a 15% target profit margin: 1 ÷ (0.40 − 0.15) = 1 ÷ 0.25 = 4.00x, and the matching target ACOS is 25%.
This calculator treats the target as a net margin you keep as a share of revenue. Ad spend gets whatever is left of the contribution margin once that profit is set aside, so a 40% margin with 15% held back leaves 25% for advertising. The other possible convention expresses profit as a multiple of ad spend, which turns the answer into break-even multiplied by some fixed factor — and that factor has to come from somewhere, while nothing in your cost structure supplies it. This page asks what margin you actually want instead of picking a multiplier for you.
Definition A has a hard wall, and the calculator will tell you when you hit it: a target profit margin equal to or above your contribution margin is impossible. You cannot keep a larger share of revenue than the margin you started with, however efficient the advertising gets — at best, with free advertising, you keep exactly the contribution margin and not a point more.
Break-Even ROAS vs ROAS vs ACOS vs CPA
- Break-even ROAS — the threshold, derived from your margin before any campaign runs. This page.
- ROAS — revenue divided by ad spend, measured after the fact. See the ROAS Calculator.
- ACOS — the same relationship written as a percentage of revenue. Your break-even ACOS is simply your contribution margin.
- CPA — what you actually paid per acquisition, which you compare against the max CPA above. See the Cost Per Acquisition Calculator.
- CPC — what you paid per click, compared against the max CPC above. See the CPC Calculator.
- LTV — if customers buy more than once, the break-even on a first order understates what you can afford. See the Customer Lifetime Value Calculator.
Common Break-Even ROAS Mistakes
- Using markup as if it were margin. A 100% markup is a 50% margin. The mistake halves your break-even and makes losing campaigns look profitable.
- Forgetting payment and shipping fees. A 3% payment fee and $6 of shipping on a $60 order is another 13 points of margin gone, and the break-even ROAS moves with it.
- Using net margin instead of contribution margin. A margin that already has rent and salaries deducted sets a per-order bar that no single order was ever meant to clear.
- Treating break-even as the target. Hitting it exactly means the campaign produced nothing. Set a target above it and use the target profit margin field to work out where.
- Discounting without recomputing. A 20% off code cuts the price but not the cost of goods, so it takes a much larger bite out of the margin, and the break-even ROAS for discounted orders is higher than for full-price ones.
Frequently Asked Questions
What is break-even ROAS?
Break-even ROAS is the return on ad spend at which a campaign exactly pays for itself: the contribution it produces covers the media that produced it, and nothing is left over. It is sometimes written BEROAS. Below it every sale the campaign wins loses money; above it every sale contributes something towards overhead and profit. Unlike ROAS, which is a measurement of what happened, break-even ROAS is a property of your cost structure and is knowable before a single ad runs.
How do you calculate break-even ROAS?
Break-even ROAS = 1 divided by your contribution margin. At a 40% margin that is 1 / 0.4 = 2.5, so you need 2.5x. At a 25% margin it is 1 / 0.25 = 4.0x. At a 50% margin it is 2.0x. If you do not know your margin as a percentage, work it out from one order first: selling price minus cost of goods minus shipping, payment and marketplace fees, divided by the selling price.
What is break-even ACOS?
Break-even ACOS is the same threshold expressed as a share of revenue instead of a multiple of spend, and it is simply equal to your contribution margin. A 40% margin gives a 40% break-even ACOS; a 25% margin gives 25%. That is not a coincidence, it is the same equation rearranged: if ad spend is exactly the margin share of revenue, the margin has been entirely spent on advertising. Higher is better for ROAS, lower is better for ACOS, and both describe the identical point.
Should I use gross margin or markup?
Margin, always, and the two are not the same number. Markup is stated against your cost; margin is stated against your selling price. A 100% markup on a $50 cost is a $100 price, which is a 50% margin, not a 100% one, so the break-even ROAS is 2.0x rather than 1.0x. Feeding a markup into this calculator as if it were a margin makes the bar look far lower than it is, which is the single most expensive mistake on this page.
Is a higher break-even ROAS worse?
It means a thinner margin, so there is less room for advertising to work in, but it is not a grade. This page names no good or bad break-even ROAS for the same reason the ROAS calculator names no good ROAS: the number is a fact about your cost structure, not a score. A business with a 10% margin and a 10x break-even can be perfectly healthy if it acquires customers some other way, and a business with a 2x break-even can still lose money by never beating it.
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