How do you calculate break-even ROAS?
Divide 1 by your gross margin expressed as a decimal. A 35% margin gives 1 ÷ 0.35 = 2.86x break-even ROAS.
Profitable — you are above break-even.
Enter the numbers from your ad platform and your real gross margin (after COGS, shipping and payment fees).
Break-even ROAS is 1 ÷ your gross margin. Set your real margin below to see the exact point where advertising stops costing you money and starts making it.
If your gross margin is 45%, every €100 of revenue leaves €45 to pay for advertising and everything else. Break-even ROAS is therefore 1 ÷ 0.45 = 2.22x: below that, the ad spend exceeds the margin it generates.
The formula is deceptively simple, which is why it is so often wrong in practice — the error is almost always in the margin input, not the maths.
| Include | Typical impact on margin |
|---|---|
| Cost of goods sold | The main deduction |
| Inbound freight and duties | 1–5 points |
| Outbound shipping and packaging | 3–10 points |
| Payment and platform fees | 2–4 points |
| Returns and refunds | 1–15 points by category |
| Discount codes actually redeemed | 2–8 points |
Lead-gen has no order value, so translate the funnel into an allowable cost per lead: close rate × average deal gross profit = maximum profitable CPL. If 8% of leads close at €4,000 gross profit, a lead is worth €320 and anything under that is profitable acquisition.
Feed offline conversions back from the CRM so the platform optimises for qualified pipeline rather than raw form fills — otherwise your cost per lead falls while cost per customer rises.
Subscription and repeat-purchase brands can profitably run below first-order break-even because the second and third orders carry no acquisition cost. Only do this with a measured repeat rate and a cash-flow buffer — 'LTV will cover it' has bankrupted more brands than any bidding mistake.
Divide 1 by your gross margin expressed as a decimal. A 35% margin gives 1 ÷ 0.35 = 2.86x break-even ROAS.
2.0x. Every €1 of ad spend must return €2 of revenue for the campaign to break even before overheads.
Calculate with ex-VAT revenue. Including VAT inflates revenue without adding margin and makes break-even look easier to reach than it is.
Yes, when you have measured repeat purchase behaviour, enough cash to fund the gap, and a clear payback window. Without cohort data it is simply a loss.
The free audit rebuilds your true break-even ROAS from real order data and checks whether your pixel and Conversions API agree with it.
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