Knowing your Break-Even ROAS (Return on Ad Spend) is the difference between running a profitable business and slowly bleeding money. This calculator helps e-commerce store owners, dropshippers, and media buyers determine exactly how much revenue they need to generate for every dollar spent on ads to cover their costs.
Many marketers aim for an arbitrary ROAS (like 3.0x or 4.0x) without understanding their actual margins. If your product costs are high, a 3.0x ROAS might still result in a loss. This tool takes your Selling Price, COGS (Cost of Goods Sold), Shipping, and Fees to calculate your true Break-Even Point. Anything above this number is profit; anything below is a loss.
How It Works
- Break-Even ROAS: This is the multiplier you need to cover all your expenses (Product + Shipping + Fees + Ad Spend). At this ROAS, your net profit is .
- Break-Even CPA (Cost Per Acquisition): This is the maximum dollar amount you can afford to spend on ads to get one sale without losing money.
- Target ROAS: If you enter a "Desired Net Profit Margin" (e.g., 20%), the tool calculates the higher ROAS required to secure that profit after all costs are paid.
Frequently Asked Questions
How is Break-Even ROAS calculated?
The formula is: Selling Price / (Selling Price - Total Costs). Alternatively, it can be calculated as 1 / Profit Margin %. For example, if your profit margin before ads is 50%, your Break-Even ROAS is 2.0x (1 / 0.50).
What should I include in "Misc Fees"?
You should include transaction fees (like Stripe or PayPal's 2.9% + .30), platform fees (like Shopify's transaction fee), and any taxes you absorb. These small fees add up and significantly impact your break-even point.
Why is my Target ROAS so high?
If you want a high net profit margin (e.g., 30%) on a product with high costs, the math requires a very high return from your ads to leave that much money leftover. To lower your Target ROAS, you either need to raise your prices or lower your product/shipping costs.
Is a lower Break-Even ROAS better?
Yes! A lower Break-Even ROAS means it is easier to be profitable. For example, a product with a Break-Even ROAS of 1.5x is much "safer" to advertise than a product requiring a 5.0x ROAS, because you don't need your ads to perform as perfectly to make money.
