Tool
Break-Even ROAS Calculator
Your ad platform reports a return number. This works out the one you have to clear before an order makes money, and what your current ROAS earns per $1,000 of spend.
Your ad platform reports a return number. This works out the one you have to clear before an order makes money, and what your current ROAS earns per $1,000 of spend.
Ads Manager reports a return number. Whether that number makes you money depends on what one order leaves behind after product cost, shipping, payment processing, and refunds. A brand keeping 45 percent of an order breaks even at 2.2. A brand keeping 25 percent needs 4.0. Both are looking at the same dashboard and reading the same figure.
Put your order economics in below. The calculator returns the ROAS you have to clear before an order turns a profit, the most you can pay to acquire an order, and what your current ROAS earns or loses per $1,000 of ad spend.
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There is no industry figure, because break-even ROAS is set entirely by your margin. A brand keeping 45 percent of an order after product, shipping, processing, and refunds breaks even at about 2.2. A brand keeping 25 percent needs about 4.0. Both can be looking at 2.4 in Ads Manager, and one of them is making money while the other is buying orders at a loss. Anyone quoting a benchmark without asking what an order leaves behind is guessing.
Divide your average order value by your contribution margin per order. Contribution margin is what is left from an order after product cost, shipping and fulfillment, payment processing, and an allowance for discounts and returns. An order of $72 that leaves $31 behind gives a break-even ROAS of 2.32. Use gross revenue as the numerator, because that is the basis Meta and Google report, and the two numbers are then comparable without adjustment.
They are the same number read at different scopes. ROAS measures one channel against the revenue that channel claims. MER, meaning total revenue divided by total ad spend, measures the whole business. With no fixed costs in the picture, both break even at the same figure. They separate the moment overhead enters, because payroll, rent, software, and retainers have to come out of contribution margin before any ad spend is profitable. That is why the calculator asks for monthly revenue and fixed costs as optional inputs.
No. Break-even ROAS is the floor, meaning the point where an order stops losing money. Target ROAS is break-even plus whatever the business needs on top for overhead and profit. Scaling to break-even buys revenue and no margin. The gap between the two is a decision about what the ad account is being asked to fund, and it is worth setting deliberately rather than discovering at the end of a quarter.