How to use the break-even ROAS calculator
- Selling price: what the customer actually pays after any discount.
- Product cost: what one unit costs you to buy or make.
- Other costs: everything you pay per order besides ads: shipping, packaging, payment gateway fees.
Results update instantly. Any currency works, as long as every number uses the same one.
The break-even ROAS formula
Margin before ads = selling price − product cost − other costs. Then:
Break-even ROAS = selling price ÷ margin
Example: a product sells for 500, costs 200, and shipping plus packaging is 50. Margin = 250, so break-even ROAS = 500 ÷ 250 = 2. Any campaign below a ROAS of 2 loses money, and the most you can pay in ads per sale is 250.
How to read the result
- Break-even ROAS below 2: healthy margin; you can compete in expensive auctions.
- Between 2 and 3: normal for most stores, but watch cost per purchase daily.
- Above 3: thin margin; paid ads are hard unless you raise price or average order value.
For cash-on-delivery stores, an order in Ads Manager isn't a sale. Work out the real cost after confirmations and returns with the COD order cost calculator.
Common ROAS mistakes
- Forgetting shipping and payment fees, which makes the margin look bigger than it is.
- Trusting Ads Manager ROAS alone without checking it against actual store sales.
- Judging from a single day; ROAS swings daily, so use a 3 to 7 day average.
FAQ
What is break-even ROAS?
It is the minimum return on ad spend a campaign needs to cover product and other costs with no profit and no loss. Anything above it is profit.
Is a ROAS of 2 good?
It depends on your margin. If your break-even ROAS is 1.6, a ROAS of 2 is profitable; if it is 2.5, a ROAS of 2 means a loss.
What is the difference between ROAS and ROI?
ROAS divides revenue by ad spend only, while ROI measures net profit after all costs divided by spend. Calculate both with the ROAS and profit calculator.