Break-Even ROAS Calculator
Your break-even ROAS is one divided by your gross margin. Enter your margin to see the floor every campaign has to clear, and the most you can pay for an order.
Your numbers
At a 40% gross margin, every $1 of ad spend has to return $2.50 just to stand still
Break-even ROAS is the single most useful number in paid media because it converts an abstract target into a floor. Anything below 2.50× is a subsidy you are paying your customers.
The arithmetic
break-even ROAS = 1 ÷ gross margintarget ROAS = 1 ÷ (gross margin − target net margin)max cost per order = average order value × gross marginEvery figure above comes from an input you set. There are no industry averages baked in, because an average you cannot check is worse than no number at all.
The one paid media number worth memorising
Most advertising targets are inherited rather than calculated. Someone decides 4× sounds respectable, it becomes the goal, and nobody checks it against the margin the business actually runs on. Break-even ROAS replaces that with arithmetic: one divided by your gross margin, and there is no opinion in it.
Why it rises so fast when margins are thin
The relationship is not linear, which is what catches people out. Halving your margin does not add half again to your target — it doubles it:
- 80% margin — 1.25× to break even
- 50% margin — 2.0×
- 30% margin — 3.3×
- 20% margin — 5.0×
- 10% margin — 10.0×
A business on 10% margin needs to return ten dollars for every one it spends before it has made a cent. That is an extremely hard ask in any auction, and it is the real reason some categories cannot make paid acquisition work no matter how good the creative is.
Turn it into a bid, not just a target
A ROAS floor is abstract. A maximum cost per order is something you can put into a bidding strategy. Multiply your average order value by your gross margin and you have the most you can pay to acquire an order without losing money; subtract your target profit and you have the number to actually bid toward.
If the honest answer is that your break-even is out of reach in the auction, that is useful information rather than a failure. It is the point at which organic search stops being a nice-to-have and becomes the only acquisition channel whose cost does not rise with every order you win.