What is break-even ROAS?

Break-even ROAS is the return on ad spend at which your ads pay for themselves and nothing more. Below it, every sale from ads loses money once product, shipping and fees are paid. Above it, you're profitable. It's the single most useful number for deciding whether a campaign should be scaled, fixed or switched off.

Worked example

An online store sells a $120 product. Product cost is 35%, shipping is $8, card fees are 2.9% + $0.30, packaging is $2, and 5% of orders are refunded. After all of that it keeps about $60 per order, a 50% contribution margin. Its break-even ROAS is therefore about 2.0x. To make a 10% profit after ads, it needs about 2.5x. At 3.0x it's comfortably profitable and can consider scaling.

What is a good ROAS?

There's no universal “good” ROAS, because it depends entirely on your margins. A software company with 85% margins breaks even around 1.2x, while a store with thin 25% margins needs 4x just to stand still. That's why comparing your ROAS to an industry average can be misleading. Compare it to your break-even and target ROAS instead.

Why count repeat purchases?

If customers come back and buy again, the first order doesn't have to be profitable on its own. This calculator shows a second break-even ROAS that counts repeat orders over 12 months. Running ads between the two numbers means you lose money on the first order but make it back over the customer's lifetime. That's a valid strategy only if you have the cash flow to wait and your repeat rate is real, not hoped for.

How to lower your break-even ROAS

• Raise average order value with bundles, upsells or free-shipping thresholds. Fixed costs per order get spread over more revenue.
• Cut product and fulfilment costs by renegotiating with suppliers or changing shipping carriers.
• Reduce returns with clearer product pages, sizing guides and photos.
• Raise prices. Even a small increase goes almost entirely to contribution margin.

Frequently asked questions

Is ROAS the same as ROI?

No. ROAS only measures revenue against ad spend. ROI (or profit) also subtracts the cost of the products and everything else. A 3x ROAS can still be a loss if your margins are thin, which is exactly what break-even ROAS reveals.

Should I use the ROAS in Google Ads or Meta Ads Manager?

Use it as a starting point, but check it against your store's actual sales. Ad platforms count conversions differently and can over- or under-report. Many businesses also track MER (total revenue ÷ total ad spend across all channels) as a reality check.

Does this work for lead generation or services?

Yes. Use your average job value as the order value and your cost to deliver the job as the product cost. Set shipping and payment fees to zero if they don't apply.