Break Even ROAS Calculator
Calculate the ROAS and maximum customer acquisition cost your ecommerce business can afford before advertising becomes unprofitable.
Key metric explanations
Order economics
Advertising limits
Find the ROAS floor your order economics can support before ads become unprofitable
Use this calculator when you know average order value and non-ad variable costs and want to know how much acquisition spend an order can absorb.
The calculator subtracts product cost, fulfillment, other variable costs, and percentage fees from average order value to find the amount left before advertising.
That pre-ad contribution is also the maximum CPA at break-even. Dividing revenue by that amount produces break-even ROAS.
Break-even ROAS is a zero-profit threshold based on the costs entered here. A business normally needs actual ROAS above break-even to leave room for profit and costs not included in the model.
How the calculation works
The model works from pre-ad contribution rather than from ad-platform metrics alone.
Calculate non-ad variable cost
Product, fulfillment, other variable costs, and percentage fees are combined.
Find maximum break-even CPA
Non-ad cost is subtracted from average order value.
Calculate contribution margin
Maximum CPA is expressed as a percentage of order revenue.
Calculate break-even ROAS
Average order value is divided by maximum CPA.
Example break-even ROAS calculation
Suppose an order has $70 of revenue and the following non-ad costs:
Percentage fees are $2.45 and total non-ad cost is $46.45. That leaves $23.55 for acquisition, giving a pre-ad contribution margin of about 33.6% and a break-even ROAS of about 2.97.
What each result means
The outputs show the same break-even threshold in both dollars and ad-efficiency terms.
Break-even ROAS
The revenue-to-ad-spend ratio where the order reaches zero profit after the included non-ad costs.
Maximum CPA
The maximum acquisition cost per order before profit falls below zero.
Pre-ad contribution margin
The percentage of revenue left after non-ad variable costs and before advertising.
Maximum ad spend percent
The share of order revenue that can be spent on acquisition at break-even.
Break-even ROAS questions
Common questions when using order economics to set advertising thresholds.
Is break-even ROAS a good target ROAS?
Not usually. Break-even ROAS represents zero profit under the assumptions entered. A profit target normally requires a higher ROAS.
Is maximum CPA the same as CAC?
For a one-order acquisition model they can be closely related, but CAC may be defined at the customer level and can include broader acquisition costs.
Should shipping be included?
Include any per-order variable cost you want the ad economics to recover. If shipping is absorbed by the business, it belongs in the cost base.
Why does a higher contribution margin lower break-even ROAS?
More contribution is available to fund advertising, so the business needs fewer revenue dollars for each ad dollar to break even.