Break-Even ROAS: Formula, Examples and Calculator

What is break-even ROAS and how do you calculate it?

Break-even ROAS is the return on ad spend at which a campaign neither makes nor loses money: the revenue it brings in covers the cost of what you sold plus the ads, and nothing is left over. The formula is break-even ROAS = 1 ÷ margin, where margin is the share of each sale you keep after every variable cost of that sale. At a 40% margin, break-even ROAS is 1 ÷ 0.40 = 2.5, so every $1 of ads has to bring back $2.50 in sales. Above that line the campaign is profitable, below it you are paying to sell.

This guide goes deep on break-even and target ROAS. If you need the basics of return on ad spend first, start with What is ROAS?

The break-even ROAS formula, step by step

You need one number: the margin per sale, as a decimal.

1. Start from the selling price (the revenue your ad platform reports for one sale).
2. Subtract every cost that only exists because that sale happened. See the list below.
3. Divide what is left by the selling price. That is the margin.
4. Divide 1 by the margin. That is your break-even ROAS. Multiply by 100 for the percentage form (2.5 = 250%).

The same formula works in every language and on every platform, so a Dutch search for “roas berekenen” leads to exactly this math.

What belongs in the margin

Most break-even mistakes come from using a margin that is too generous. Count the costs that grow with each extra order:

• Cost of goods sold (COGS): what you paid for the product or for making it.
• Shipping and packaging you pay, including free-shipping orders.
• Payment processing fees from your card processor or checkout.
• Marketplace or app store fees. App stores keep a share of in-app purchases; Google lists its current rates on the Google Play service fees page.
• Returns, refunds, and chargebacks: an allowance based on your own history.
• Discounts and coupon codes, if the revenue your ad platform reports is before discounts.

Leave out fixed costs such as rent, salaries, and software subscriptions. They do not change with one more order, and adding them turns break-even ROAS into a number that moves every time your volume does. Cover them with the profit you aim for in your target ROAS instead.

Break-even ROAS by margin: quick table

This is plain arithmetic (1 ÷ margin), not a benchmark. The last column is the flip side: at break-even, your ad spend can be at most this share of the revenue it brings in. That share equals the margin, and it is what Amazon sellers call break-even ACoS (advertising cost of sales, ad spend ÷ ad sales).

Notice the curve. Going from a 20% to a 25% margin lowers break-even by a full point (5.0 to 4.0), while going from 70% to 75% lowers it by only 0.1. Small cost savings matter far more to a low-margin store than to software or digital goods.

From break-even ROAS to target ROAS

Break-even is the floor, not the goal. A target ROAS is the ROAS you need to keep a set share of revenue as profit after variable costs and ads:

Target ROAS = 1 ÷ (margin − profit share you want to keep)

This is the same formula the ROAS calculator uses for its “Target ROAS for your profit goal” result. If your profit goal is as large as the margin, no ROAS can reach it, and the calculator shows a dash instead of a number.

Some teams prefer a target of profit per order instead of a share of revenue. That works too: subtract the profit you want from the margin per order in dollars, then divide the order value by what is left. A $100 order with $40 margin and a $10 profit goal gives a target ROAS of 100 ÷ 30 = 3.33.

Break-even ROAS examples for ecommerce and lead gen

Ecommerce: the full cost stack

Repeat purchases change the picture. If customers reliably buy again, you can accept a first-order ROAS below break-even, as long as you have measured the repeat value rather than hoped for it. CAC vs CPA vs LTV shows how to work out what a customer is worth over time, and the LTV calculator does the math for you.

Lead generation: give each lead a revenue value

When the ad brings a lead instead of a sale, ROAS needs a revenue value per lead: value per lead = close rate × average revenue per closed customer. Break-even ROAS still comes from the margin on that revenue, and you can turn it straight into a maximum cost per lead.

The cost per result calculator runs this check for you: it takes your spend, results, value of one customer, margin, and the share of results that become customers, and shows your cost per result next to the most you can afford. What is CPA? covers the same calculation from the cost side.

Break-even ROAS for apps: LTV and cohort ROAS

An app rarely breaks even on day 0. Revenue from in-app purchases, subscriptions, and ads arrives over weeks or months, so app teams measure cohort ROAS: the cumulative revenue from all users acquired on a given day (or by a given campaign), divided by what those users cost, read at fixed points such as day 7, day 30, and day 180.

Break-even works the same way, with one adjustment: decide whether your revenue is gross or net. If your reports show what users paid before store fees, the margin is what is left after the store fee and any other per-user cost (servers, payment, content), and break-even ROAS is 1 ÷ that margin. If your reports already show net revenue and your other variable costs are small, break-even is close to 100%.

Reading a cohort ROAS curve

The figures in this table are invented to show how to read the curve, not typical results. The day the curve crosses your break-even line is your payback period. A shorter payback ties up less cash, which is often what decides whether you can scale. Retention rate is the main reason two cohorts with the same day 7 ROAS end up far apart by day 180.

Setting a day 7 target from your own history

Because you cannot wait six months to change bids, you set an early target that predicts payback later. A common method: take the ratio between later and early revenue from past cohorts, and divide your break-even by it. If your past cohorts earned 3 times their day 7 revenue by day 180, and you need 110% by day 180, your day 7 target is about 110% ÷ 3 = 37%. Liftoff describes this approach in Why LTV is essential for UA, and D7 ROAS should be retired, with an example of a day 365 to day 7 LTV ratio of 20 leading to a 5% day 7 target, and also warns that day 7 and day 365 value are not proportional. Recheck the ratio on new cohorts, especially after adding a traffic source or changing prices.

Break-even ROAS vs ROI vs POAS

Three metrics describe the same campaign from different angles. POAS (profit on ad spend) puts gross profit on top of the fraction instead of revenue, which bakes the margin in and makes break-even the same for every product.

They convert into each other: POAS = ROAS × margin, and ROI on ad spend = POAS − 1. A ROAS of 4 at a 30% margin is a POAS of 1.2 and an ROI of 20%. The ROAS calculator reports the ROI figure as “Return on ad spend as ROI.”

POAS is most useful when one account sells a 15% margin item next to a 70% margin item. A single ROAS target overbids on the first and underbids on the second; passing profit instead of revenue as the conversion value fixes that, at the cost of sending margin data to your ad platform.

How Google Ads and Meta use a target ROAS

Google Ads Target ROAS

Google’s help page About Target ROAS bidding describes it as a Smart Bidding strategy that predicts the value of each conversion and sets bids at auction time. You enter the goal as a percentage; Google’s example is $5 in sales for $1 of ad spend, a 500% target. A few points from that page matter for break-even:

• The target is an average. Google says some conversions will return a higher ROAS and some a lower one, while the strategy tries to keep overall conversion value per cost at your target. Set it at or above break-even, never below.
• Too high limits volume. The page warns that a target set too high may limit the traffic your ads get.
• It needs values and data. You must track conversion values, and Search and Shopping campaigns need at least 15 conversions in the past 30 days.

For App campaigns, Google’s guide Acquire high-value app users at scale with Target ROAS bidding says a higher target narrows the pool of potential installs and recommends running a target CPA campaign first to find a realistic ROAS. Its companion page on setting an initial Target ROAS for App campaigns suggests starting from the achieved conversion value per cost of a comparable campaign, measured over your in-app event’s conversion window, with Firebase or Google Play Codeless as the conversion source. Checked on October 20, 2026; Google changes these requirements from time to time.

Meta minimum ROAS

Meta’s equivalent is a ROAS floor. Its Marketing API bid strategy documentation describes a minimum ROAS option for value optimization, where the floor is total conversion purchase value divided by total spend. The same rule applies: a floor below break-even tells the system that losing money is acceptable. Checked on October 20, 2026.

Match the target to the value you send

A target only makes sense against the conversion value the platform sees. If you send revenue, use your target ROAS from the formula above. If you send gross profit, you are bidding on POAS, and break-even becomes 100%. Keep your attribution settings and conversion window stable too; a shorter window counts less revenue and makes the same campaign look further from break-even.

Common break-even ROAS mistakes

If you buy results instead of clicks, the cost side becomes a fixed price, and the break-even question turns into one comparison: is the value of a result, times the margin, above the price you pay for it? Pay only for confirmed results explains how that model works.

Frequently asked questions