Break-even ROAS = 1 ÷ gross margin. At a 40% gross margin you need a 2.5x ROAS ($2.50 of revenue per $1 of ad spend) just to cover costs. Anything above that is profit; anything below is a loss. Enter your numbers to get your break-even ROAS, target ROAS, and maximum CPA.
Calculate your break-even ROAS
Revenue from a typical order, before ad spend.
(Price − cost of goods) ÷ price. Excludes ad spend.
Profit you want left after ad spend. Leave blank for break-even only.
—Break-even ROAS
—Break-even ACOS
—Max cost per order
—Target ROAS
Enter an order value and gross margin to see your numbers.
How it works
Gross margin is what is left from each sale after the cost of the product itself. Ad spend has to come out of that margin, so the revenue you need per advertising dollar is simply the inverse of your margin:
Break-even ROAS = 1 ÷ gross margin. A 25% margin needs 4x ROAS; a 50% margin needs only 2x. Break-even ACOS (advertising cost of sale) is the same relationship expressed as a percentage of revenue — it equals your gross margin. Maximum cost per order is order value × gross margin: spend more than that to win a sale and you lose money on it.
If you also want profit left over, subtract it from the margin before inverting: Target ROAS = 1 ÷ (gross margin − desired profit margin). Wanting 10% profit on a 40% margin means you can only spend 30% of revenue on ads, so your target ROAS rises to about 3.33x.
Frequently asked questions
What is a good ROAS?There is no universal number, because it depends entirely on your margin. A 2x ROAS is highly profitable at a 70% margin and loss-making at a 30% margin. The only ROAS that matters is one above your break-even ROAS, which this calculator gives you.
What is the difference between ROAS and ACOS?They are inverses of each other. ROAS is revenue divided by ad spend (expressed as a multiple, e.g. 2.5x). ACOS is ad spend divided by revenue (expressed as a percentage, e.g. 40%). Break-even ACOS always equals your gross margin.
Should I include shipping and transaction fees in gross margin?Yes, if you want an accurate break-even. Any variable cost that scales with each order (product cost, shipping, payment processing, pick and pack) should be deducted before you calculate gross margin. Fixed overheads should not.
Why is my target ROAS impossible to hit?If your desired profit margin is equal to or greater than your gross margin, there is no room left for ads at all. Either raise your prices, cut product costs, or lower the profit margin you are targeting.
Is this break-even ROAS calculator free?Yes. It is completely free and runs entirely in your browser, so none of your figures are sent anywhere.
