How the break-even ROAS calculation works
The calculator first works out how much of each order is left after the costs that rise with every sale. That amount, the contribution per order, is the most you can pay in advertising to win the order without losing money.
Contribution per order = order value − product cost − shipping − (order value × payment fee %) − other variable costs
Break-even ROAS = order value ÷ contribution per order
Break-even CPA = contribution per order
If you add a target margin, the calculator holds that share of each order back as profit, and only lets the rest go on advertising:
Target ROAS = order value ÷ (contribution per order − order value × target margin %)
Worked example
An order is worth $80. The product costs $28, shipping $7, payment fees are 3% ($2.40) and you allow $2 for returns. Contribution is $80 − $28 − $7 − $2.40 − $2 = $40.60. Break-even ROAS is $80 ÷ $40.60 = 1.97. So you need about $1.97 in revenue for every $1 of ad spend just to stand still. To keep 15% ($12) as profit, the ads can only take $28.60 per order, and the target ROAS rises to 2.80.
How to read your result
- Below break-even: each attributed sale loses money on the first order. That can be a deliberate choice if repeat purchases make up the difference, but it should be a decision, not an accident.
- Between break-even and target: the ads are covering their cost but not producing the profit you want. Small gains in conversion rate or order value often close this gap faster than cutting spend.
- Above target: the economics support scaling, provided the ROAS figure itself is trustworthy (see below).
A high break-even ROAS (above about 3) means thin margins leave very little room for advertising. That is a pricing and offer question as much as a media buying one.
What this calculator cannot know
- Whether your ROAS figure is accurate. Meta reports conversions using its own attribution windows and modelling. Compare it with what your store or CRM recorded before you trust it. Server-side tracking through the Conversions API usually narrows the gap.
- Customer lifetime value. If customers come back to buy again, a first order below break-even can still pay off. Use the Target CPA Calculator to factor repeat revenue in.
- Fixed costs. Rent, salaries, software and agency fees are left out on purpose. Break-even ROAS answers “does each sale pay for its own ad?”, not “is the business profitable overall?”.
- Tax. Use order values excluding sales tax or VAT. Including tax makes your break-even ROAS look lower than it really is.
Common mistakes
- Using a gross margin percentage that leaves out shipping, payment fees and returns, which can understate break-even ROAS by 20–40%.
- Judging a campaign after a few days of data. See how long to run a Meta ad before judging it.
- Setting one ROAS target for every product when margins differ widely. Low-margin products need a higher ROAS, or a separate campaign.
- Treating break-even as the goal. It is the floor; plan around your target ROAS.
When it is worth getting help
If the numbers say your campaigns should be profitable but the bank account disagrees, the problem is usually tracking, attribution or a landing page that loses buyers after the click. Those are worth checking before you change budgets or creative.