Break-Even ROAS Calculator: Find the ROAS You Must Beat
Your break-even ROAS is 1 divided by your contribution margin percent. Contribution margin (CM2) is what an order leaves after every variable cost except ads, so it is your ad budget per order. Put in one typical order below. The calculator backs out that margin, the ROAS a campaign has to beat, and the most you can pay to acquire that order before it loses money.
If your account runs near or below this break-even line, the fix is usually the creative or the page it lands on, not the bids.
What the calculator tells you
It turns one order's costs into two lines your ad account can be managed against: a break-even ROAS and a break-even CPA.
| Level | What's taken off | What it means | Example ($80 order) |
|---|---|---|---|
| CM1 | Revenue minus landed COGS | Product margin | $52.00 |
| CM2 | CM1 minus shipping, payment fees, pick and pack, returns | What you can spend on ads to win the order | $33.60 |
| CM3 | CM2 minus ad spend | What is left for fixed costs and profit | Depends on ad spend |
- Contribution margin per order (CM2) is the cash an order leaves after landed COGS, outbound shipping, payment fees, pick and pack, and returns. It is what you have to spend on winning that customer.
- CM2 % is that cash as a share of the order.
- Break-even ROAS is the platform ROAS where the order covers its costs and ad spend exactly. Below it, each extra order costs you money.
- Break-even CPA is CM2 in dollars: the ceiling on what one first order can cost to acquire.
How to read your result
Treat the break-even ROAS as the floor, not the goal. A campaign sitting right on it makes zero profit, and it still has to carry your fixed costs. Set targets above it, and set them per product group, because a catalog with mixed margins has a different break-even line for each group.
If the calculator says "no break-even", CM2 is zero or negative. No ROAS fixes that. The order loses money before a single ad dollar is spent, so the fix sits in price, bundle size, COGS or shipping, not in the ad account.
The formula in plain words
- Payment fees = AOV x fee percent.
- CM2 = AOV minus landed COGS, outbound shipping, payment fees, fulfillment, and the returns allowance.
- CM2 % = CM2 / AOV.
- Break-even ROAS = 1 / CM2 %.
- Break-even CPA = CM2 per order.
A worked case: an $80 order with $28 COGS, $8 shipping, 3% fees, $4 fulfillment and $4 returns leaves $33.60 of CM2, or 42.0%. One divided by 0.42 is a break-even ROAS of 2.38, and $33.60 is the most that order can cost to acquire.
Use real numbers from the last 30 days of invoices, not the rates in your 3PL contract. Fees, carrier surcharges and returns drift, and the break-even line moves with them. The full margin ladder, from CM1 through CM3, and why revenue ROAS hides negative orders, is in our guide to contribution margin for DTC.
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