Use the right margin
Gross margin is not markup.
Margin is gross profit divided by revenue. Use the margin before advertising and check which costs it already includes.
Break-Even ROAS Calculator · Order economics
Start with the order. Work back to the ad spend.
See how much of an order is available for advertising after margin, extra costs and fees. Then compare breaking even with retaining a contribution towards overheads and profit.
Calculate your allowance
Break-Even ROAS Calculator
What can one order contribute?
Use revenue after discounts and refunds, excluding GST or VAT. The calculation stays in your browser. Currency changes the label, not the exchange rate.
02 / Set a useful threshold
Your advertising allowance
Enter your figures or load an illustrative example.
How the maths works
Contribution before ads = order value × gross margin − percentage fees − additional cost per order.
Break-even ROAS = order value ÷ contribution before ads. Maximum break-even CPA equals that contribution.
Target advertising allowance = contribution before ads − order value × target contribution percentage. Target ROAS = order value ÷ that allowance.
ROAS is revenue divided by ad spend (a multiple, not a percentage). These are per-order estimates before fixed overheads and tax, assuming the same order value and cost mix. They do not include repeat purchases or forecast campaign performance.
Plain-text summary
Put it to work
A revenue multiple needs a cost story.
Two businesses can report the same ROAS and have very different amounts left over. Start with consistent inputs.
Count each cost once
Separate genuinely additional costs.
Add fulfilment, packaging or fees only if they are not already included in gross margin. Double-counting makes the allowance look smaller than it is.
Keep something back
Model a retained contribution.
The target percentage reserves part of revenue after ads for fixed overheads and profit. It is a contribution target, not a net-profit calculation.
Illustrative example
The same $100 order. Two different thresholds.
Illustrative inputs: $100 average order value, 60% gross margin, $10 additional cost, 3% additional fees and a 15% retained contribution target.
- Order revenue$100
- Cost included in gross margin−$40
- Additional variable cost−$10
- Additional fees−$3
- Available before advertising$47
Break even on these costs
2.13× ROAS
$100 ÷ $47. Spending the full $47 allowance leaves nothing from this modelled order for fixed overheads or profit.
Retain $15 per order
3.13× ROAS
$100 ÷ $32. Reserving $15 reduces the advertising allowance from $47 to $32 per order.
These are modelled thresholds, not campaign recommendations. A platform’s attributed revenue and your actual order economics may use different definitions.
Before you move on
Make the comparison like for like.
Reconcile revenue definitions.
Check whether your advertising report includes tax, shipping or orders later refunded. Those differences can distort a comparison.
Consider the product mix.
A blended average may hide lower-margin products. Recalculate for materially different order types before interpreting the threshold.
Recognise a missing allowance.
If contribution is zero or negative, no finite ROAS solves these inputs. Review the costs and assumptions rather than treating a higher multiple as the answer.
Your questions
A little more clarity.
Is break-even ROAS the same as profitability?
No. The basic threshold covers only the costs entered. Fixed overheads, tax and other omitted costs still need to be funded. A retained contribution is not guaranteed profit.
What does the cost-per-order allowance mean?
It is the amount available for advertising per modelled order. For the break-even threshold it equals contribution before ads; for the target threshold it also deducts the retained contribution.
Does it include repeat purchases?
No. This is a single-order model. It does not estimate lifetime value, repeat orders, attribution accuracy or future demand.
Connect the numbers to the campaign.
If reported ROAS and the money left from orders tell different stories, we can help review the measurement, campaign structure and assumptions behind the comparison.
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