What is a break-even ROAS?

Break-even ROAS is the minimum Return on Ad Spend needed to cover all costs without making profit or loss. It's calculated as 1 ÷ Profit Margin. For example, with a 50% profit margin, your break-even ROAS is 2× — meaning you need $2 revenue for every $1 spent on ads just to break even.

How do I calculate break-even ROAS from profit margin?

Simply divide 1 by your profit margin (as a decimal). For 40% margin: 1 ÷ 0.40 = 2.5× break-even ROAS. For 70% margin: 1 ÷ 0.70 = 1.43× break-even ROAS. The higher your margin, the lower your break-even ROAS.

What if my break-even ROAS is very high?

A high break-even ROAS (like 5× or higher) means you have low profit margins. Options: 1) Improve margins by reducing costs or raising prices, 2) Focus on organic marketing instead of paid ads, 3) Target only highly qualified audiences to maximize conversion rates, 4) Consider if paid advertising is viable for this product.

Is break-even ROAS the same as target ROAS?

No. Break-even ROAS is the minimum to avoid losses. Target ROAS should be higher to ensure profit. A common approach: Target ROAS = Break-even ROAS × 1.2 to 1.5. So if break-even is 2×, target 2.4× to 3× to build in a profit margin.

How do I lower my break-even ROAS?

Lower break-even ROAS requires higher profit margins. Options: 1) Reduce product costs (better suppliers, bulk orders), 2) Increase prices (if market allows), 3) Reduce overhead costs, 4) Negotiate better shipping rates, 5) Decrease return rate through better product descriptions and quality.

How to Calculate Break-even ROAS

What is Break-even ROAS?

Break-even ROAS is the minimum Return on Ad Spend you need to achieve just to cover your costs — not make profit, but not lose money either.

How it differs from regular ROAS:

Regular ROAS: Measures how much revenue you get per ad dollar spent
Break-even ROAS: The minimum ROAS threshold to avoid losing money

💡 If your actual ROAS is below your break-even ROAS, you're losing money on every sale. If it's above, you're making profit.

For a deep dive into the formula, see our Break-even ROAS Formula guide →

What You'll Need Before You Start

To calculate your break-even ROAS, you'll need one of these:

Option A: Product Costs

Product Cost (COGS)
Selling Price

Option B: Profit Margin

Your profit margin % (if you know it)

Either option works — we'll show you how to calculate profit margin if you don't know it.

How to Calculate Break-even ROAS: 3 Steps

Follow these steps to calculate your minimum profitable ROAS:

Break-even ROAS Calculation Examples

Let's see the formula in action with different business scenarios:

High Margin Product (Dropshipping)

Selling Price:$50

Product Cost:$15

Profit Margin:70%

Break-even ROAS:1.43×

Great margins! Lots of room for advertising.

Low Margin Product (Retail)

Selling Price:$100

Product Cost:$70

Profit Margin:30%

Break-even ROAS:3.33×

Tight margins. Need highly optimized campaigns.

SaaS Subscription

Selling Price:$50/mo

Product Cost:$5/mo

Profit Margin:90%

Break-even ROAS:1.11×

Excellent! Almost any positive ROAS is profitable.

Try the Break-even ROAS Calculator

Enter your numbers below to calculate your break-even ROAS instantly.

Break-even ROAS Calculator

Selling Price ($)

Product Cost ($)

Profit Margin

70.0%

Break-even ROAS

1.43×

Use Full Calculator

Understanding Your Results

What Your Break-even ROAS Tells You

Break-even ROAS	Meaning	Recommendation
< 2×	High profit margin product	Aggressive ad spend is viable
2× - 4×	Medium profit margin	Optimize campaigns carefully
> 4×	Low profit margin product	Consider improving margins first

Setting Your Target ROAS

Your target ROAS should be higher than break-even to ensure profit:

Target ROAS = Break-even ROAS × 1.2 to 1.5

Break-even: 1.43× → Target: 1.7× to 2.1×

Common Mistakes to Avoid

Forgetting All Costs

Only counting product cost, forgetting shipping, packaging, transaction fees, returns.

Include ALL costs that occur before ads: COGS + shipping + fees + avg return cost.

Confusing Revenue and Profit

Using revenue numbers where profit margin is needed.

Remember: ROAS is about revenue, but break-even ROAS depends on profit margin.

Ignoring Return Rates

Not accounting for the products that get returned and refunded.

Adjust your margin for expected return rate (e.g., 10% returns = reduce margin by 10%).

Wrong Margin Calculation

Calculating markup instead of margin: (Price - Cost) ÷ Cost is markup, not margin.

Margin = (Price - Cost) ÷ Price. Divide by selling price, not cost.