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Break-even ROAS calculator
Find the lowest ROAS your ads can run at without losing money.
Your results
Break-even ROAS
2.00x
At or above this, your ads are not losing money (200% if your platform shows ROAS as a percent).
Based on the costs you entered.
- Left per order before ads$50.00
- Margin before ads50%
- Break-even cost per sale (CPA)$50.00
- Minimum ROAS to keep 20% after ads3.34x
- Max cost per sale to keep 20%$30.00
- Margin after ads at 2.5x10%
Break-even cost per lead
₹2,000.00
At or below this, your ads are not losing money.
Based on the costs and conversion rate you entered.
- Left per customer before ads₹20,000.00
- Break-even cost per customer₹20,000.00
- Max cost per lead to keep 20%₹1,000.00
- Max cost per customer to keep 20%₹10,000.00
- Estimated cost per customer at ₹1,500 per lead₹15,000.00
- Left per customer after ads₹5,000.00
- Margin after ads10%
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How this is calculated
ROAS (return on ad spend) is the sales your ads bring in, divided by what you spent on them. Your ads are paid out of what each sale leaves after its costs. Break-even ROAS is the point where the ads use up all of it.
A worked example
- Selling price: $100
- Costs: $35 product + $10 shipping + $3 payment fees + $2 other = $50
- Left before ads: $100 − $50 = $50, so the margin is 50%
- Break-even ROAS: 1 ÷ 0.50 = 2.00x
- Break-even cost per sale: $50
- To keep 20% after ads, ads can use 30% of the price: 1 ÷ 0.30 = 3.333...x. The calculator shows 3.34x, rounded up, because 3.33x falls just short.
- At a current ROAS of 2.5x, ads cost 40% of revenue (1 ÷ 2.5), so you keep 50% − 40% = 10% after ads. That is above break-even but short of the 20% target.
- Put another way: every $100 spent on ads brings $250 in sales, which leaves $125 before ads. Take away the $100 spent and $25 is left after ads.
"Before ads" and "after ads"
"Before ads" takes away the order costs you entered. "After ads" also takes away ad spend. Neither includes overhead you didn't enter, such as rent, salaries or returns. Costs you entered are already counted, so don't take them off again.
What is left is not your final profit. It is what each sale adds toward overhead, and then toward profit. If a cost comes out of every order, add it under "Other costs".
Margin, not markup
A product that costs $50 and sells for $100 has a 100% markup but a 50% margin. Break-even ROAS uses margin. Using markup makes ads look profitable when they are not.
Words used
CPA (cost per acquisition) is the ad cost to get one sale. Break-even CPA equals what is left per order before ads.
Rounding
Minimum ROAS figures are rounded up and maximum cost per sale rounded down, so the figures shown are always enough.
Results compare your exact numbers, so 3.33x is short of a target that needs 3.333...x.
Limits
This works out break-even on the first order. Refunds lower your real margin, so break-even ROAS is higher than shown. Repeat purchases without more ad spend can justify a lower ROAS on the first order. Results are estimates, not promises.
Common questions
What is a good ROAS?
There is no single good ROAS. A good ROAS is one above your own break-even ROAS, with room for the margin you want to keep. A store with a 70% margin can do well at 2x, while a store with a 25% margin loses money at 3x.
Why is my break-even ROAS higher than I expected?
Usually because shipping, payment fees and other per-order costs were left out, or because markup was used instead of margin. A smaller margin means a higher break-even ROAS.
Should I compare this with platform ROAS or blended ROAS?
Check both, and treat neither as proof. Blended ROAS (total revenue divided by total ad spend) also counts organic sales and returning customers. Platform ROAS can double count, because Google and Meta may both claim the same sale. Neither shows how many sales the ads caused. Whichever you use, keep the same revenue definition and costs as here.
Should the price include sales tax, VAT or GST?
No, because the tax is not yours to keep. Also check what your ad tracking sends as the purchase value: if it includes tax or shipping, the ROAS your platform reports looks higher than it really is.
How this is calculated
A lead is not a customer yet, so the most you can pay per lead depends on what each customer leaves you before ads and how many leads it takes to win one customer.
A worked example
- Revenue per new customer: ₹50,000. Delivery cost: ₹30,000.
- Left per customer before ads: ₹50,000 − ₹30,000 = ₹20,000. That is the break-even cost per customer.
- 10 in 100 leads become customers, so break-even cost per lead is ₹20,000 × 10% = ₹2,000
- To keep 20% of ₹50,000 (₹10,000) after ads, ads can use ₹10,000 per customer, which is ₹1,000 per lead.
- At ₹1,500 per lead, each customer costs ₹1,500 ÷ 10% = ₹15,000 in ads. That leaves ₹5,000, or 10% of customer revenue: below break-even cost per lead, but short of the 20% target.
"Before ads" and "after ads"
"Before ads" takes away the delivery cost you entered. "After ads" also takes away the ad cost to win each customer. Neither includes overhead you didn't enter, such as rent or salaries. Costs you entered are already counted, so don't take them off again.
Words used
CPL means cost per lead.
CAC means customer acquisition cost: the advertising cost to win one paying customer.
Rounding
Maximum cost per lead and per customer are rounded down, so the figures shown never go over the real limit.
Estimates, not promises
Based on the costs and conversion rate you entered. It is an estimate, not a guaranteed outcome.
If your conversion rate changes, so does the answer, so check it again every month or two.
Common questions
Cheap leads are not always cheap customers
₹500 leads that convert at 2% cost ₹25,000 per customer. ₹1,500 leads that convert at 10% cost ₹15,000 per customer. Judge a lead source by its cost per customer, not its cost per lead alone.
Which time period should I use?
Use revenue and delivery cost for the same stretch of a customer's time with you, such as the first project or month. Lifetime revenue with one month of delivery costs makes leads look more affordable than they are.
Which conversion rate should I use?
Count only leads old enough to have decided. If a sale usually takes six weeks, last week's leads will make your rate look lower than it is.
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