Break-Even ROAS Calculator
Before asking whether your ROAS is good, you need the figure below which it is mathematically impossible to profit. That number comes from your margin, not from a benchmark.
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Break-even ROAS comes from your margin
Return on ad spend is revenue divided by ad spend. The break-even point — where the gross profit on a sale exactly equals what you paid to get it — is:
Break-even ROAS = Price ÷ (Price − Variable cost)
With the defaults, $50 ÷ ($50 − $20) = $50 ÷ $30 = 1.67x. Below 1.67x every additional sale from those ads loses money, no matter how good the campaign metrics look.
Max CPA is the number to give your ad platform
ROAS is a ratio, and ad platforms bid in currency. The useful translation is the maximum you can pay to acquire one order:
Max CPA at break-even = Price − Variable cost
That is $30 with the defaults — pay more than $30 per order and you are buying revenue at a loss. Your target CPA is lower, because break-even is not the goal: to keep a 15% net margin on a $50 order you need $7.50 left, so the most you can spend is $22.50.
Why 4x ROAS can be terrible and 1.8x can be excellent
Benchmarks circulate as if ROAS were comparable across businesses. It is not, because break-even is set by margin:
| Price | Variable cost | Contribution | Break-even ROAS |
|---|---|---|---|
| $50 | $40 | $10 (20%) | 5.00x |
| $50 | $30 | $20 (40%) | 2.50x |
| $50 | $20 | $30 (60%) | 1.67x |
| $50 | $10 | $40 (80%) | 1.25x |
A thin-margin reseller at 4x ROAS is losing money on every order. A high-margin digital product at 1.8x is comfortably profitable. Anyone quoting a good ROAS without asking your margin is quoting their own business.
The number this deliberately ignores
All of the above treats the first order in isolation. Businesses with genuine repeat purchase can rationally buy first orders at or below break-even, because the customer's second and third orders carry no acquisition cost. That is a real strategy and it has a real precondition: measured repeat rates from your own data, not hoped-for ones. Losing money on acquisition in expectation of loyalty that never materialises is the most expensive mistake in performance marketing. Check it in the CAC payback calculator before relying on it.
Questions
What is a good ROAS?
Any figure above your break-even, which is set by your own margin rather than by an industry benchmark. Price divided by contribution per order gives it: a 60% contribution margin breaks even at about 1.67x, while a 20% margin needs 5x just to stand still. This is why quoted benchmarks are close to meaningless without the margin attached.
How do I calculate break-even ROAS?
Divide your selling price by your contribution per order, where contribution is price minus all variable costs excluding advertising. Do not use a margin figure that already has ad spend removed — that double-counts advertising and overstates the target, sometimes badly enough to make you pause profitable campaigns.
Should I ever run ads below break-even ROAS?
Only with measured evidence of repeat purchase, and knowing you are funding acquisition from cash. If a customer reliably orders three times a year, the first order can be a loss and the relationship still profitable. If that repeat rate is an assumption rather than a measurement, running below break-even simply loses money at scale.