Break-even ROAS Calculator
This calculator determines the minimum ROAS your campaigns must achieve to cover ad spend without eroding product margin, and shows how that threshold shifts as margin or cost assumptions change. It is designed for performance marketers, e-commerce managers, and agency account leads who need a defensible target ROAS figure for campaign setup and reporting. The tool models multiple margin scenarios side by side so you can see how a small change in COGS or pricing strategy affects your advertising viability.
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How this is calculated
Enter your product revenue, cost of goods sold, and any variable fulfillment costs, and the calculator derives gross margin and divides 1 by that margin percentage to produce your break-even ROAS.
Every model runs locally in your browser. Nothing you type is sent anywhere.
Frequently asked questions
How do you calculate break-even ROAS?
Break-even ROAS is calculated as 1 divided by your gross margin expressed as a decimal. If your gross margin is 40%, your break-even ROAS is 1 divided by 0.40, which equals 2.5. This means your campaigns must generate at least $2.50 in revenue for every $1 spent on advertising before they begin contributing to profit. Any ROAS below this threshold means advertising is consuming margin rather than generating it.
What is a good target ROAS for e-commerce?
A good target ROAS is one that exceeds your break-even ROAS by enough to cover overhead and deliver a profit contribution. If your break-even ROAS is 2.5, you might target 4x or 5x to ensure a healthy margin contribution after accounting for fixed costs. Across e-commerce categories, median reported ROAS ranges from 3x to 7x, but these figures are meaningless without reference to the specific margin structure of the business.
Does break-even ROAS account for shipping and returns?
The standard break-even ROAS formula uses gross margin, which should include the cost of goods and direct variable costs. If your business has significant shipping costs or return rates that materially affect realized margin, you should factor those into your margin calculation before computing break-even ROAS. The calculator allows you to input variable fulfillment costs separately so your break-even figure reflects your true economics rather than just COGS.