How do I calculate break-even ROAS?

Divide 1 by your gross margin. A 40% gross margin gives a break-even ROAS of 1 ÷ 0.40 = 2.5. Below 2.5x that campaign is losing money.

Should break-even ROAS include shipping and payment fees?

Yes. Anything that scales with each additional order belongs in cost of goods: product cost, packaging, shipping, and payment processing. Leaving them out produces a break-even number that is comfortably wrong in the optimistic direction.

The most you can pay to acquire one order before losing money, which is your gross profit per order. A $100 order costing $45 to fulfil gives a maximum CPA of $55 at break-even.

Break-even ROAS calculator: the ROAS your margin requires

Average order value$Cost of goods per order$Product, packaging, shipping, payment fees.Net margin you want%Profit you want left after ad spend. Leave blank for pure break-even.

Gross margin55%

Break-even ROAS1.82x

Maximum CPA at break-even$55The most you can pay per order before you lose money.

Target ROAS for your desired margin2.5x

Break-even ROAS = 1 ÷ Gross margin · Target ROAS = 1 ÷ (Gross margin − Desired net margin)

In short

Break-even ROAS is 1 divided by your gross margin. At a 50% margin you break even at 2.0x, at 40% you need 2.5x, and at 25% you need 4.0x. Any campaign running below that number is losing money no matter how good the ROAS looks in the ads dashboard, which is why break-even ROAS should be set before you pick a target, not after.

Set this number before you set a target

Most accounts pick a ROAS target by feel, or by copying whatever a competitor mentioned on a podcast. That is backwards. Your break-even ROAS is arithmetic, it comes straight out of your margin, and every other target should be built on top of it.

Once you know it, campaign decisions get much less emotional. A campaign below break-even is not underperforming, it is losing money, and it should be paused today rather than given another week to turn around.

Maximum CPA is the version your buyer actually uses

Break-even ROAS is a ratio, which makes it awkward to act on inside a campaign. Maximum CPA is the same fact in a directly usable form: the most you can pay to acquire one order before you are underwater. It is your gross profit per order.

If your average order is $100 and costs $45 to fulfil, you can pay up to $55 per order at break-even. Want to keep 15% net? Then your ceiling drops to $40, and that is the number to compare your actual CPA against.

Frequently asked questions

How do I calculate break-even ROAS?: Divide 1 by your gross margin. A 40% gross margin gives a break-even ROAS of 1 ÷ 0.40 = 2.5. Below 2.5x that campaign is losing money.
Should break-even ROAS include shipping and payment fees?: Yes. Anything that scales with each additional order belongs in cost of goods: product cost, packaging, shipping, and payment processing. Leaving them out produces a break-even number that is comfortably wrong in the optimistic direction.
What is maximum CPA?: The most you can pay to acquire one order before losing money, which is your gross profit per order. A $100 order costing $45 to fulfil gives a maximum CPA of $55 at break-even.

Other free tools

ROAS calculatorFree ROAS calculator. Enter ad spend and revenue to get return on ad spend, plus the break-even ROAS your margin actually requires.CPA calculatorFree CPA calculator. Enter spend, clicks and conversions to get cost per acquisition, cost per click and conversion rate in one place.AOV calculatorFree average order value calculator. Enter revenue and orders to get AOV, plus the CPA headroom a higher AOV buys you.Engagement rate calculatorFree engagement rate calculator. Enter engagements plus reach, impressions or followers to get all three engagement rates at once.

Stop calculating this by hand

Muze reads these numbers straight out of your Meta, Google, Amazon and Shopify accounts and tells you which campaigns are below break-even. Ask it from ChatGPT or Claude. Every change previews before it runs.

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