E-Commerce Break-Even ROAS Calculator
Simulate minimum ROAS and target CPA required to profitably run paid ads across Google, Meta, and TikTok.
Parameters & Config
Total paid media budget allocated across advertising channels
Total gross revenue attributed to the advertising campaign
Cost percentage to manufacture, source, or fulfill the purchased products
Average checkout dollar value per transaction
Gross revenue generated per dollar spent on advertising
Net take-home cash after ad spend and product cost deductions
Key Metrics & Sub-Totals
3 itemsCalculation Summary & Unit Breakdown
| Metric | Calculated Value | Notes / Logic |
|---|---|---|
| Total Advertising Spend | $5000.00 | Paid media budget |
| Gross Revenue Generated | $16000.00 | Ad-driven GMV |
| Product Cost (COGS) | 40% | $6400.00 total cost |
| Return on Ad Spend (ROAS) | 320% | 3.20x spend |
| Break-Even ROAS Threshold | 166.7% | Minimum to avoid loss |
| Net Profit from Advertising | $4600.00 | After ads & product cost |
| Effective Cost Per Acquisition (CPA) | $20.31 | Based on $65 AOV |
| Net Profit Margin on Ad Revenue | 28.7% | Take-home return |
Overview & Methodology
Break-Even ROAS is the minimum Return on Ad Spend your campaigns must achieve so that ad spend plus manufacturing/fulfillment costs equal total sales ($0 net profit/loss). Any ROAS above this threshold generates net profit.
Mathematical Formulation
Gross Margin = 1 - (COGS % / 100). Break-Even ROAS = (1 / Gross Margin) × 100. ROAS % = (Revenue / Ad Spend) × 100.Optimization Best Practices
If your COGS is 40%, your gross margin is 60%, meaning your Break-Even ROAS is 166.7% (1.67x return).
Increase your Average Order Value (AOV) through post-purchase upsells to lower your required break-even ROAS threshold.
Do not optimize for ROAS alone: a lower ROAS on high-volume campaigns often yields higher total net dollar profit.
Frequently Asked Questions
Q.What is the formula for Break-Even ROAS?
Break-Even ROAS = 1 divided by your Gross Profit Margin percentage. (e.g. if gross margin is 50%, break-even ROAS is 1 / 0.50 = 200% or 2.0x).
Q.How much profit do I make at 320% ROAS on $5,000 ad spend with 40% COGS?
$5,000 spend generates $16,000 revenue. After $6,400 COGS (40%) and $5,000 ads, net profit is $4,600.00.
Q.What is effective CPA on a $65 AOV?
Generating $16,000 from $65 orders represents ~246 orders. At $5,000 ad spend, effective CPA is $20.31.