Signal PPC

Break-Even ROAS Calculator

Find the minimum ROAS you need to break even on advertising, based on your contribution margin.

The percentage of revenue left after all non-advertising variable costs — product cost, shipping, payment processing, marketplace fees, fulfillment, etc. This is your contribution margin, not your gross margin. If your gross margin is 60% but you also pay 10% in payment processing and fulfillment fees, your contribution margin is 50%, not 60%.

Formula

Break-Even ROAS = 1 ÷ Contribution Margin

Contribution margin here means the percentage of each sale's revenue left over after every non-advertising variable cost — cost of goods sold, shipping, payment processing fees, marketplace commissions, and fulfillment — but before advertising cost. This is different from gross margin, which typically only subtracts cost of goods sold. Using gross margin instead of contribution margin will understate the ROAS you actually need and can make unprofitable advertising look fine on paper.

Worked Example

Suppose a product sells for $100. After cost of goods ($40), payment processing ($3), and fulfillment ($7), $50 remains before advertising — a 50% contribution margin.

Break-Even ROAS = 1 ÷ 0.50 = 2.0. Any ROAS above 2.0 contributes to profit; below 2.0, advertising is losing money on that product, even though a ROAS of, say, 1.5 might look "good" on a spend-vs-revenue basis.

Use the ROAS Calculator to check your actual ROAS, then compare it against the break-even figure here.

Related Calculators

Paid Media

ROAS Calculator

Calculate your return on ad spend from spend and revenue.

Related Articles

Marketing Profitability

How to Calculate Your Break-Even ROAS

A step-by-step guide to finding the minimum ROAS you need to break even, using contribution margin rather than gross margin.

 Marketing Profitability

Why ROAS Doesn't Tell You Whether Your Ads Are Profitable

ROAS measures revenue against ad spend, not profit. Here's why a 'good' ROAS can still lose money, and what to check instead.