Break-Even ROAS Calculator
The exact ROAS where ad spend stops losing money — from contribution margin, not gross.
Break-even ROAS is the return on ad spend where a campaign stops losing money: 1 ÷ contribution margin ratio. If each order keeps 47 cents on the dollar after COGS, payment fees, shipping, pick-and-pack, and refunds, your break-even ROAS is about 2.12×. Anything below that loses money on every sale. Enter your costs to find yours.
These calculators are for planning and estimation, not accounting or financial advice. Verify against your actual platform, payment-processor, and bookkeeping figures before making budget or pricing decisions.
Break-even ROAS
2.04×
Below this ROAS you lose money on every order; above it, ad spend is profitable.
About the Break-Even ROAS Calculator
Break-even ROAS is the single threshold every paid campaign lives or dies on, and it comes straight from your contribution margin: divide one by the share of each order's revenue that survives all the variable costs. The mistake that quietly drains ad budgets is using gross margin here. Gross margin subtracts only the cost of the product itself. Contribution margin goes further and subtracts the costs that actually vary with each order you ship: the payment processor's percentage plus its fixed per-transaction fee, outbound shipping, pick-and-pack labor, and the money lost when a share of orders get refunded. Those costs are real and they are not small — together they often turn a 70% gross margin into a contribution margin in the high 40s. That gap is the difference between a break-even ROAS of 1.4× and one above 2.1×, and campaigns sitting in between look like winners on the dashboard while losing a few dollars on every order. Refunds deserve special attention: a refunded order usually costs you the shipping, the pick-and-pack, and the fixed transaction fee even though the sale reverses, so a higher refund rate pushes your break-even ROAS up. Find the real threshold first, then judge every campaign against it.
Frequently asked questions
What is break-even ROAS?+
It's the return on ad spend at which a campaign exactly covers its costs — no profit, no loss. Above it you make money on incremental spend; below it every order loses money. It equals 1 ÷ your contribution margin ratio.
What's the difference between contribution margin and gross margin?+
Gross margin is revenue minus COGS. Contribution margin also subtracts the variable costs of fulfilling an order — payment fees, shipping, pick-and-pack, and refund losses. Break-even ROAS must use contribution margin, or it will be too low.
Do refunds change my break-even ROAS?+
Yes. A refunded order typically still costs you shipping, pick-and-pack, and the fixed payment fee even though the revenue reverses. A higher refund rate lowers your effective contribution margin and raises break-even ROAS.
Should shipping and payment fees really count?+
Absolutely — they vary with every order, so they belong in contribution margin. Leaving them out is the most common reason a store thinks it's profitable on ads when it isn't.
By D.J. Gelner
D.J. Gelner is a direct-response marketer with 12+ years running growth for DTC and supplement brands, including VP-level roles. A former attorney, he builds and verifies the unit-economics math behind paid-media decisions daily.