Break-even ROAS calculator.
Break-even ROAS is the line where an ad pound exactly earns itself back. Below it, every extra order loses money, however good the account looks.
Break-even ROAS
1.98×
Break-even POAS
1.00×
Contribution margin
50.5 %
Max cost per order
€41.84
ROAS needed
2.81×
Break-even ROAS is 1 divided by the contribution margin. Below it, every extra order loses money — no matter how good the ad account looks.
Contribution per order: €42
Contribution before and after advertising. Fixed costs and tax are excluded.
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01Why it starts from the price
Most break-even calculators ask for a contribution margin. The trouble is that this is exactly the number people do not know — and a five point guess moves break-even noticeably.
Here it is calculated instead: order value minus cost of goods, shipping, packaging and fees. The margin becomes a result rather than an assumption.
02Returns belong in the maths
A returned order brings no revenue but has cost shipping both ways plus handling. In categories with high return rates it moves break-even significantly, and it is the line most often left out.
If you do not know your return rate by category, it is one of the most valuable numbers to pull from the shop.
03Break-even ROAS and POAS
Break-even POAS is always 1. That is the whole point of POAS: the number is built so that zero is zero, regardless of industry and margin.
Break-even ROAS differs for every business — it is 1 divided by the contribution margin. That is why two shops can share a ROAS while only one of them makes money.
Questions
What is a good ROAS?
There is no number that holds across businesses. A good ROAS sits above your break-even with enough room to cover fixed costs. At a 40 % margin break-even is 2.5; at 20 % it is 5.
Should I include VAT?
No. VAT is not your money. Including it makes the margin look better than it is and sets break-even too low.
Read on
What is break-even ROAS?
Break-even ROAS is the ROAS at which ads exactly break even. It's 1 divided by your margin, and far more useful than the industry average.
What is POAS?
POAS measures gross profit per advertising euro. Explore the formula, the difference from ROAS and an example including variable costs.
How to set your POAS target
A POAS target isn't found in a table — it's found in your P&L. Here's how to work out the number that actually secures a profit.
What is contribution margin?
Contribution margin is revenue minus variable costs — what's left to cover fixed costs and profit. The base number behind all profit-based steering.