Break-Even ROAS Calculator
Find the minimum return on ad spend your business needs to cover product costs, selling fees, and advertising expenses without making a loss.
Enter Your Product and Advertising Costs
Enter your selling price, per-sale costs, fees, and advertising spend.
Your Results Will Appear Here
Enter your product costs and advertising spend to calculate your break-even ROAS.
How to Calculate Break-Even ROAS
Break-Even Return on Ad Spend (ROAS) is the minimum advertising revenue-to-advertising spend ratio needed to cover the variable costs associated with each sale and the advertising cost.
Break-Even ROAS Formula
Contribution per Sale = Selling Price − Product Cost − Packaging Cost − Shipping Cost − Fixed Transaction Fee − Marketplace Fees − Payment Fees
Contribution Margin Rate = Contribution per Sale ÷ Selling Price
Break-Even ROAS = 1 ÷ Contribution Margin Rate
Break-Even Ad Revenue = Advertising Spend × Break-Even ROAS
Calculation Example
Suppose you sell a product for $200. Product cost is $100, packaging is $5, seller-paid shipping is $10, marketplace fees are 5%, and payment processing fees are 2.9%.
- Selling price: $200.
- Product, packaging, and shipping costs: $115.
- Marketplace fee: $10.
- Payment processing fee: $5.80.
- Contribution per sale before advertising: $69.20.
- Contribution margin: $69.20 ÷ $200 = 34.60%.
- Break-even ROAS: $200 ÷ $69.20 = 2.89x.
- With $1,000 in advertising spend, break-even ad revenue is approximately $2,890.17.
Frequently Asked Questions
What is Break-Even ROAS?
Break-Even ROAS is the minimum revenue-to-ad-spend ratio required to cover the variable costs included in the calculation. At this level, the contribution remaining after those costs covers the advertising spend.
What is a good Break-Even ROAS?
It depends on your contribution margin. Businesses with lower contribution margins generally need a higher ROAS to break even, while businesses with higher contribution margins can break even at a lower ROAS.
Does a ROAS above break-even mean my business is profitable?
It indicates that the listed variable costs and advertising spend are covered under the assumptions used. It does not guarantee overall business profit because taxes, labor, storage, returns, overhead, and other expenses may still need to be deducted.
Why must contribution per sale be positive?
If the selling price does not cover the product costs and listed selling fees, each additional sale creates a loss before advertising. A positive break-even ROAS cannot be calculated from those inputs.
Does this calculator include advertising costs in contribution margin?
No. Contribution margin is calculated before advertising costs. Advertising spend is then used to calculate the break-even revenue target.
Are marketplace and payment fees included?
Yes. Both percentage-based fees are calculated using the selling price entered in this calculator.
Does this calculator include taxes and other overhead?
No. Add any relevant variable costs to the cost inputs where appropriate. Taxes, labor, storage, returns, and fixed operating expenses are not automatically included.