Break-Even ROAS Calculator

Break-even ROAS tells you the minimum return on ad spend needed so that every dollar spent on ads is covered by gross profit. The formula is:

For example, if you sell a product for $60 with $18 in COGS and $6 in shipping, your profit per unit is $36 and your profit margin is 60%. Your break-even ROAS is $60 / $36 = 1.67x. Any ROAS above 1.67x is profit.

This is the single most important number in paid advertising. Without it, you cannot know whether your campaigns are making or losing money. Many brands scale unprofitable campaigns simply because they never calculated their break-even point.

Break-even ROAS is the return on ad spend at which you neither make nor lose money on a sale. Above this number, each sale generates profit. Below it, you lose money on every conversion.

It is the inverse of your profit margin. A 50% margin means a 2.0x break-even ROAS. A 25% margin means 4.0x. The thinner your margins, the harder your ads need to work.

Understanding break-even ROAS changes how you evaluate campaigns. A 3x ROAS sounds good — but if your margins are 20%, you need 5x just to break even. Conversely, a 1.5x ROAS might be excellent if your margins are 70%.

To improve your break-even ROAS, either increase your price, reduce your costs, or both. Many DTC brands improve margins by reducing packaging costs, negotiating supplier rates, or increasing average order value through bundles and upsells. For a deeper look at optimizing paid ad profitability, check out our Facebook Ads Guide.