Business
Break-even ROAS Calculator
Work out the ROAS you must hit before ads stop losing money, using your net margin.
What ROAS do I need to break even?
ROAS is ad-attributed revenue divided by ad spend. A 400% ROAS sounds strong until your net margin after product and fees is only 20% — in that case you need £5 of sales for every £1 of ads before those ads contribute profit. This calculator turns your contribution margin into the break-even ROAS (and MER-style targets if you think in that frame) so media buyers and founders share one number. Enter the margin you actually keep, not gross markup. Last-click revenue is often overstated; treat results as a model. Related tools: ad spend profit and LTV to CAC. Estimates for planning only — not marketing or accounting advice. Brand campaigns and upper-funnel spend will often sit below break-even ROAS on last-click reports while still helping blended efficiency — segment so you do not kill useful awareness spend with a prospecting rule. Subscription businesses should prefer LTV-aware targets once retention data exists.
Worked example
Net margin after product and selling fees is 25%. Break-even ROAS = 1 ÷ 0.25 = 4.0 (400%). Spending £1,000 needs £4,000 attributed revenue to cover the ads from contribution; anything above that ratio is contribution toward overhead and profit. At 18% margin the bar rises to about 5.6 ROAS.
Limits and assumptions
Ignores incrementality tests, branded search inflation and delayed subscription revenue. New-customer versus returning-customer margins can differ — use a blended margin or segment campaigns. VAT and refunds belong in the margin you enter. Platform-reported ROAS can disagree with finance revenue. Reconcile definitions before you set automated bid caps to the break-even line.
Frequently asked questions
What is break-even ROAS?
It is 1 divided by your contribution margin decimal — the revenue-per-ad-pound needed before ads add profit.
Should I use gross margin or contribution margin?
Use margin after variable selling costs (product, fees, shipping you absorb). That matches cash from each sale.
Is a ROAS above break-even always good?
It helps contribution, but cash timing, stock risk and brand goals still matter. Scale carefully.
How does this differ from CAC targets?
ROAS is revenue-based; CAC is cost to acquire a customer. Pair with LTV when subscription or repeat purchase matters.
What margin do I enter if I discount heavily?
Use the discounted selling price margin, or raise the break-even ROAS to match promotional weeks.