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ROAS & Break-Even Calculator

"Is a 3x ROAS good?" depends on one number: your contribution margin. Find your break-even ROAS, compare it with what your campaigns actually return, and know instantly whether ads print money or burn it.

How the math works

Break-even ROAS: the only ad metric that matters

ROAS on its own is vanity. A 4x ROAS sounds great until you learn the product keeps only 20% of revenue after costs — at 20% margin, 4x is precisely break-even, and every dollar of "scale" is a dollar of risk. The metric that pairs with ROAS is break-even ROAS: the return your unit economics demands before ads create any profit at all.

Contribution margin

CM% = (AOV − product_cost − other_variable_costs) ÷ AOV

Break-even ROAS

break-even ROAS = 1 ÷ CM%

Keep 50% of revenue → break-even at 2.0. Keep 25% → 4.0. Keep 10% → 10.0. The thinner your margin, the more brutal the ROAS your ads must clear — which is why margin-rich offers scale and margin-poor offers suffocate, regardless of how good the ad creative is.

Net ad profit

net profit = revenue × CM% − ad spend

Note what is not in that formula: fixed costs. Ads are judged on contribution — whether they add more than they consume. Payroll, rent, and subscriptions come out of contribution across all channels.

Questions

ROAS calculator FAQ

What is break-even ROAS?

Break-even ROAS is the return on ad spend at which your advertising neither makes nor loses money. It equals 1 ÷ contribution margin. If you keep 25% of revenue after product cost, fees, and shipping, you need a ROAS of 4.0 just to break even — anything above that is real profit.

How do I calculate contribution margin?

Contribution margin per order = average order value − product cost − payment/platform fees − shipping − any other variable cost per order. Divide by the order value to get the percentage. Fixed costs (subscriptions, salaries) are excluded — that is what makes it "contribution".

Is a ROAS of 2 good?

It depends entirely on your margin. At a 60% contribution margin, a 2.0 ROAS is comfortably profitable. At a 20% margin, a 2.0 ROAS loses money on every order. Never judge ROAS without break-even ROAS next to it.

Should I include returns and taxes?

For a realistic model, yes — reduce revenue by your expected return rate or add an average returns cost per order. The calculator has an "other variable costs" field you can use for returns, taxes, and packaging.

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