The short answer
A good break-even ROAS is below 2.5x. That means your contribution margin is 40% or better, and every pound of advertising has room to earn something after paying for itself. Between 2.5x and 3.5x is workable but leaves little slack. Above 4.0x, advertising has to be nearly perfect to pay, and the fix is almost never in the ad account.
Contribution margin is what is left of an order after cost of goods, shipping, fulfilment and payment fees, before overheads. Not gross margin. The difference matters, because shipping and fees alone can take 10 to 15 points off.
Break-even ROAS by margin
| Contribution margin | Break-even ROAS | Max CPA on a £60 order | Verdict |
|---|---|---|---|
| 70% | 1.43x | £42 | Room to be aggressive |
| 60% | 1.67x | £36 | Comfortable |
| 50% | 2.00x | £30 | Good |
| 40% | 2.50x | £24 | Typical DTC |
| 30% | 3.33x | £18 | Tight |
| 25% | 4.00x | £15 | Fix the margin first |
| 20% | 5.00x | £12 | Ads cannot save this |
Read the table from right to left. A brand on a 25% margin needs 4.0x just to stand still, and its maximum cost per acquisition on a £60 order is £15. Meta will not reliably deliver a new customer for £15 in most categories. That brand's problem is price, order value or cost of goods, and no amount of creative testing fixes a spreadsheet.
How to calculate yours
- Take average order value. Say £60.
- Subtract cost of goods for that order. £21 leaves £39.
- Subtract shipping and fulfilment. £7 leaves £32.
- Subtract payment processing. About £2 leaves £30.
- Contribution margin is £30 ÷ £60 = 50%. Break-even ROAS is 1 ÷ 0.50 = 2.0x.
Returns push it higher. If 10% of orders come back and you pay the return shipping, the margin on the average order falls and the break-even rises. The break-even ROAS calculator handles the arithmetic, including the maximum CPA.
What actually moves the number
- Price. A 10% price increase on a 40% margin product moves break-even from 2.5x to roughly 2.2x. Nothing in the ad account does that.
- Average order value. Bundles, thresholds for free shipping and post-purchase upsells spread fixed per-order costs over more revenue.
- Cost of goods. Slow to change, but the largest lever there is.
- Shipping and fulfilment. Often the most negotiable line on the sheet, and the one nobody has renegotiated since launch.
- Returns. Better sizing information and product photography cut returns, and every avoided return is margin.
Break-even is a floor, not a target
Hitting break-even means advertising paid for itself and contributed nothing to rent, salaries or profit. Your target ROAS sits above it by whatever the business needs. If break-even is 2.5x and you need advertising to contribute 20% of revenue toward overheads and profit, the target is roughly 3.3x.
First order or lifetime?
Everything above is first-order break-even. If customers reliably buy again, you can justify a first-order ROAS below break-even and recover it on the second and third orders. Be careful with this. It only works if repeat rates are measured rather than hoped for, and if the business can carry the cash gap between the first order and the payback. Model it separately. Do not simply lower the floor and call it lifetime value.
Frequently asked
Is a 3x ROAS good?
It depends entirely on margin. At a 50% contribution margin, 3x is comfortably profitable. At 25%, 3x is a loss on every order. There is no universal good ROAS, only good relative to your break-even.
What is the average break-even ROAS for eCommerce?
In our experience most DTC brands land between 2.0x and 3.0x, which corresponds to a 33% to 50% contribution margin. Apparel and low-ticket consumables often sit higher because of returns and shipping.
Should break-even ROAS include fixed costs?
No. Break-even ROAS covers the variable cost of the order and the ads. A fully loaded break-even that includes salaries and rent is a different, higher number, and useful for the board rather than for daily bidding.
How does break-even ROAS relate to POAS?
At break-even ROAS, POAS equals 1.0x: advertising produced exactly as much contribution as it cost. Break-even ROAS is expressed in revenue terms so it can be compared to what the platform reports.
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.