Cloud Ten / Break-even ROAS calculator
Break-even ROAS calculator: the ROAS you need just to stand still.
Work out the ROAS you need just to break even. Enter order value, cost of goods, shipping and fees to see your break-even ROAS and maximum CPA.
Break-even is the floor. To fund overheads and growth you need to clear it, not meet it.
What is break-even ROAS?
Break-even ROAS is the point where advertising exactly pays for itself. Every pound of spend returns just enough gross profit to cover that pound. Below it you are buying revenue at a loss.
Contribution margin is what is left of an order after cost of goods, shipping, fulfilment and payment fees, before overheads.
Why the number surprises people
On a 25% contribution margin you need a 4.0x ROAS just to stand still. Plenty of brands scale hard at 3x believing they are winning, because ROAS is the number the platform shows and margin is the number it does not know.
Break-even is a floor, not a target
Hitting it means advertising paid for itself and contributed nothing to rent, salaries or profit. Set your real target above it.
A worked example
An order sells for £60. Cost of goods is £21, shipping and fulfilment £7, payment fees £2. Contribution per order is £30, a 50% margin. Break-even ROAS is 1 ÷ 0.50 = 2.0x, and the most you can pay to acquire that order is £30. Returns push both numbers the wrong way, which is why the calculator asks.
What is a good break-even ROAS?
A low one, because it means margin is doing the work. Below 2.0x you have room to buy growth. Between 2.0x and 3.0x is typical for DTC. Above 4.0x the ads have to be almost perfect to pay, and the fix is usually price, order value or cost of goods rather than the ad account.
From break-even to a target
Break-even is where POAS equals 1.0. Your target ROAS sits above it by whatever margin has to cover overheads and profit. Check the whole operation, not just one channel, with MER.
Frequently asked
What is break-even ROAS?
The return on ad spend at which advertising exactly pays for itself. Below it you lose money on every sale; above it you make gross profit.
How do I calculate break-even ROAS?
Divide 1 by your contribution margin. A 40% margin gives a break-even ROAS of 2.5x. A 25% margin needs 4.0x. A £60 order that leaves £30 after cost of goods, shipping and fees has a 50% margin and a 2.0x break-even.
What is a good break-even ROAS?
A low one. Under 2.0x means margin is doing the work and there is room to buy growth. 2.0x to 3.0x is typical for DTC. Above 4.0x, advertising has to be nearly perfect to pay, and the fix is usually price, order value or cost of goods.
What is the difference between break-even ROAS and target ROAS?
Break-even is the floor at which ads cover their own cost. Target ROAS is the number you actually run at, set above break-even by whatever you need for overheads and profit. If break-even is 2.5x, a sensible target might be 3.5x.
How do I turn break-even ROAS into a maximum CPA?
Divide average order value by break-even ROAS. A £60 order with a 2.0x break-even gives a maximum CPA of £30. That is what one new order can cost before it loses money.
Should I target break-even ROAS?
No. Break-even is the floor, not the goal. It covers the cost of the ads and nothing else - no overheads, no salaries, no profit.
Does break-even ROAS include repeat purchases?
No. It looks at the first order only. If repeat purchase is reliable and you can afford the cash gap, running below first-order break-even can still be a profitable decision. Model it separately rather than assume it.
Is break-even ROAS the same as BEROAS?
Yes. BEROAS is simply the abbreviation, and the two are used interchangeably.