Break-Even ROAS Calculator — Find Your Minimum Profitable ROAS

Most ecommerce advertisers set ROAS targets based on gut feeling, advice from a course, or whatever number “sounds good.” The problem is that a 3x ROAS target is meaningless if you do not know whether 3x actually makes you money. Break-even ROAS tells you the exact minimum return you need to cover every cost associated with fulfilling an order.

The formula is straightforward: Break-Even ROAS = Product Price / (Product Price - All Per-Order Costs). All per-order costs include your cost of goods, shipping, payment processing fees, packaging, returns allowance, and any other per-order expenses.

How Break-Even ROAS Changes by Product

Consider two products in the same store. Product A sells for £80 with £20 in total costs, giving a break-even ROAS of 1.33x. Product B sells for £25 with £15 in total costs, giving a break-even ROAS of 2.50x. If you set a blanket 2x ROAS target across your account, Product A campaigns are highly profitable while Product B campaigns are losing money.

This is why serious advertisers calculate break-even ROAS per product or at least per product category. It allows you to set different campaign targets and allocate budget to where the real profit is.

Break-Even ROAS vs Target ROAS

Your break-even ROAS is the floor. It is the point where you neither make nor lose money on ads. Your target ROAS should always be above your break-even point, with enough buffer to cover fixed overhead costs like rent, software subscriptions, salaries, and your desired profit.

A useful rule of thumb is to add 30-50% on top of your break-even ROAS as your target. If your break-even ROAS is 2.0x, a reasonable target would be 2.6x to 3.0x, depending on your overhead costs and profit goals.

Understanding Maximum CPA

Maximum CPA (Cost Per Acquisition) is the flip side of break-even ROAS. It tells you the most you can spend to acquire a single customer before the order becomes unprofitable. This is calculated as: Max CPA = Selling Price - All Non-Ad Costs.

Knowing your maximum CPA is particularly useful when running conversion-optimised campaigns on platforms like Google and Meta, where you can set CPA bid caps. Setting your bid cap slightly below your maximum CPA ensures every conversion is at least marginally profitable.

Common Costs People Forget

When calculating break-even ROAS, most people remember COGS and shipping but forget several other per-order costs that add up quickly:

• Payment processing fees: Stripe charges 1.4% + 20p for UK cards, Shopify Payments is similar. On a £50 order, that is about £0.90.
• Packaging costs: Branded boxes, tissue paper, thank-you cards, and stickers can easily add £1-3 per order.
• Returns allowance: If your return rate is 15%, factor in the cost of handling returns across all orders. This is often 2-5% of revenue.
• Platform fees: If you sell on marketplaces, factor in their commission. Even on Shopify, there are transaction fees if you do not use Shopify Payments.

Getting these numbers right is the difference between thinking you are profitable and actually being profitable. Take 30 minutes to audit your real per-order costs, then use the calculator above to find your true break-even point.