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Join early accessBreak-even ROAS
The ROAS at which a campaign exactly covers its costs — no profit, no loss.
Break-even ROAS is the return where an ad campaign pays for itself exactly. Above it you profit; below it you lose money — even if the platform reports a ‘positive’ ROAS. It falls straight out of your contribution margin: fatter margins break even at a lower ROAS.
In practice
Break-even ROAS is the number that turns a platform metric into a decision. Ad managers will happily report a 2× ROAS as a win; if your contribution margin is 30%, break-even sits at 3.3× and that 2× campaign is losing money on every order it wins. Knowing the threshold is what separates "the campaign is working" from "the campaign is spending".
It moves whenever your costs move, which is the part most people forget. A supplier price rise, a shipping increase, a heavier discount or a jump in return rate all thin your margin and push break-even ROAS up — so a target you set last year may be quietly wrong today. Recalculate it whenever your unit economics change, not once a year.
Formula
Break-even ROAS = 1 ÷ Contribution margin
Example: A 40% margin → 1 ÷ 0.40 = 2.5× break-even ROAS.
What a good result depends on
Lower is better — it means each sale carries more margin to fund ads.
Common mistakes
- Setting ROAS targets without knowing your margin.
- Forgetting variable costs beyond COGS in the margin.
Questions people ask
- How do I calculate my break-even ROAS?
- Divide 1 by your contribution margin as a decimal. A 40% margin gives 1 ÷ 0.40 = 2.5×. The accuracy depends entirely on getting every variable cost into that margin.
- Which costs belong in the margin?
- Everything that scales with an order: product cost, payment and marketplace fees, shipping and packaging, and expected returns. Leave out fixed costs like rent and salaries — those aren't caused by the extra sale.
- Should I always run above break-even ROAS?
- Not necessarily. Running below it is a deliberate investment when you're buying a first order from customers who'll repeat, or buying rank at launch. It's only a mistake when it's accidental.