Break-even ROAS calculator

Worked example

Average order value 1,200 before tax. Per order:

Item	Amount
Product cost	480
Shipping	120
Payment fees	36
Packaging	24
Returns, spread per order	60
Contribution per order	480

Other variable costs total 240. Break-even ROAS = 1,200 ÷ 480 = 2.50; break-even CPA = 480. At a reported ROAS of 2.50, ad spend uses up exactly the 480 the order leaves.

How it relates to the break-even point

In accounting, the break-even point is the sales volume at which revenue covers fixed plus variable costs. Break-even ROAS is the same idea at the size of one order: treat ad spend as a variable cost per order and ask how much of the revenue it may take. Rent and salaries are not in it, so at exactly break-even ROAS the business as a whole is still short by its fixed costs.

Using it to decide whether to raise the budget

Work out break-even ROAS from your own costs, then compare the ROAS your ad account reports:

Reported ROAS	Means	Do first
Below break-even	Each extra order loses a little more	No more budget; pause or shrink the worst ad sets
Between break-even and your target	Orders, no profit	No more budget; change creative, page or offer
Above target, with enough purchases	There is money left over	Then consider more budget, in steps, checking after each

The target is break-even plus the profit you want to keep; set it in the max CPA calculator. It cannot equal break-even: ads that exactly break even pay nothing towards fixed costs.

Common mistakes

• Using gross margin instead of contribution. Taking off only product cost gives too low a threshold. In the example, margin alone is 60% and implies 1.67; with shipping, fees, packaging and returns it is 2.50.
• Reported ROAS has a different numerator. Meta's purchase ROAS uses the purchase value your site or store sends with each event. If that value includes tax or shipping, reported ROAS runs higher than one built on net revenue. Compare like with like.
• Counting only attributed orders. The ad account counts purchases it can match within its attribution window. It can be high or low; check it against what you actually shipped or collected before deciding.
• Forgetting orders that never pay. Cash-on-delivery parcels not collected and failed payments count as purchases in the ad account but bring in nothing. If that share is high, discount the order value before you calculate.

FAQ

How do you calculate ROAS?

ROAS = revenue from ads ÷ ad spend. Spend 1,000 and bring in 3,000 of revenue, and ROAS is 3, often written 300%.

Is break-even ROAS the same as the break-even point?

Same idea, different scope. The break-even point covers the whole business, fixed costs included. Break-even ROAS looks at one order and leaves rent and salaries out.

Can I raise the budget once ROAS is above break-even?

Not yet. Just above break-even means the order does not lose money; it has not paid for fixed costs or made a profit. Raise spend once ROAS is above your target and there are enough purchases to trust it.