Ad glossary
Break-even ROAS
The minimum ROAS at which ad-driven sales cover product and variable costs, so the campaign neither makes nor loses money.
Break-even ROAS is the return on ad spend at which a campaign covers its costs exactly, with nothing left over and nothing lost. Any ROAS above this number is profitable on a per-order basis; anything below it loses money on each sale, before fixed overheads are even considered.
How to calculate it
Break-even ROAS = 1 ÷ profit margin before ad spend
Profit margin here means the share of the selling price left after cost of goods, shipping, payment fees and other variable costs, but before advertising.
Worked example (made-up numbers): you sell a product for $50. Product cost is $15, shipping is $8 and payment and app fees come to $2, so variable costs total $25. Your margin before ads is $25, or 50% of the price. Break-even ROAS = 1 ÷ 0.50 = 2.0. If a campaign returns less than $2 in revenue for every $1 spent, each sale loses money. Try it with the break-even ROAS calculator.
In practice
- Calculate break-even ROAS per product or per AOV band, since margins vary across a catalogue.
- Set a target ROAS above break-even to leave room for returns, overheads and profit.
- Revisit it when costs change, for example after a supplier price increase or a move to free shipping.
- If repeat purchases are strong, some brands accept a first-order ROAS below break-even and recover the difference through LTV.
Last reviewed Oct 27, 2026