Break-even ROAS calculator
Break-even ROAS is 1 divided by your contribution margin. Most calculators stop at gross margin, which flatters the answer: fulfilment, payment fees and returns all come out before advertising does. This one takes them, and optionally the repeat purchase rate that lets you buy the first order at a loss.
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The formula
Contribution per order = price - cost of goods - fulfilment, adjusted for returns
Break-even ROAS = price / contribution per order
Equivalently 1 divided by the contribution margin. The distinction from gross margin is not academic: on an €80 order with €28 of goods, €9 of fulfilment and an 8 percent return rate, gross margin says 65 percent and break-even 1.54x, while contribution says about 52 percent and break-even about 1.93x. Planning to the first number and paying the second is how an account looks profitable in the dashboard and is not.
How to read the result
- The first-order figure is the one to buy against unless you genuinely measure repeat purchase. The repeat row is a plan, not a fact, until your cohort data confirms it.
- Break-even is a floor, not a target. Running at break-even means advertising for free and paying for the privilege of the risk, so aim for the last row.
- Recompute when your input costs move. A shipping surcharge or an FX swing changes the target and nothing in the ad platform will tell you.
What people get wrong
- Using gross margin and ignoring fulfilment, payment fees and returns, which flatters the target by a wide margin.
- Buying against a lifetime-value break-even before you have cohort data proving the repeat rate.
- Treating break-even as the goal. It is the line below which you are certainly losing.
- Forgetting that a discount code lowers the order value and raises the required ROAS at the same time.
Frequently asked questions
What is break-even ROAS?
The return on ad spend at which advertising exactly covers its own cost: 1 divided by your contribution margin. Below it every additional euro of spend loses money.
Should I use gross margin or contribution margin?
Contribution. Gross margin ignores fulfilment, payment fees and returns, all of which are paid before advertising, so it produces a break-even target that is comfortably too low.
Can I run below break-even on the first order?
Only if you measure repeat purchase and have the working capital to wait for it. Doing it on an assumed repeat rate is the most common way a scaling ecommerce account runs out of cash.