Break-Even ROAS Calculator

What is break-even ROAS?

Break-even ROAS (BEROAS) is the minimum return on ad spend at which your ad revenue covers all order costs and leaves nothing for profit. If your actual ROAS falls below that number, each sale costs you more than it makes you. Understanding your break-even ROAS is the first step to profitable Meta advertising.

Every ecommerce business has a different break-even line depending on product margins, fulfilment costs and payment fees. A business selling high-margin products might break even at 1.5x ROAS, while a dropshipping store with thin margins might need 4x or more. There is no universal answer: only your numbers can tell you.

The break even ROAS formula, with a worked example

The be roas formula has two parts:

1. Left per order = order value - product cost - shipping - payment fee (% of order value) - other costs - refund allowance (% of order value).
2. Break-even ROAS = order value / left per order.

If Meta reports a higher order value than your store (because tax or shipping is included in the purchase event), use that reported value as the numerator.

Worked example: A $75 order with $25 product cost, $8 shipping and a 3% payment fee ($2.25) leaves $39.75 for ads. Break-even ROAS = 75 / 39.75 = 1.89x. Below 1.89x, each sale loses money.

How to calculate break even ROAS, step by step

1. Start with your order value (what the customer pays before tax).
2. Subtract your product cost per order.
3. Subtract shipping and fulfilment costs.
4. Subtract payment processing fees, which are usually a percentage of the order value.
5. Subtract any other per-order costs, such as packaging or subscription app fees.
6. Subtract a refund allowance: if 5% of orders are returned, that is 5% of revenue you never keep.
7. Divide the original order value by the amount left. The result is your BEROAS.

If you already know your gross profit margin %, the breakeven roas calculator above has an "I know my margin %" toggle. Divide 1 by your margin (as a decimal) to get the same result: a 40% margin gives a 2.50x break-even ROAS.

What is a good break even ROAS?

A good break-even ROAS is simply one your ads can beat consistently. There is no industry benchmark that applies across ecommerce because margins vary too widely.

As a practical guide: a beroas below 2x means you have strong margins and room to test. A beroas between 2x and 3x is typical for most DTC brands. A beroas above 4x usually means either thin margins or high fulfilment costs. Profitable campaigns are possible but require tight creative and bidding discipline.

Use this free beroas calc to find your floor, then set your target ROAS above it. Madgicx's AI monitors your active ads and finds the ones falling below your line before your daily budget runs out.

Dropshipping and break-even ROAS

Dropshipping break-even ROAS tends to be high because product margins are thin. A typical dropshipping order might leave 20-30% after product cost and shipping, which translates to a beroas calculator result of 3x to 5x. At that level, an average ROAS of 3x that looks profitable by platform benchmarks may actually be break-even or worse for your specific product.

The beroas calculator above lets you enter your dropshipping numbers directly. Use the "More costs" section to add supplier processing fees or packaging. The "Refund and return rate %" field accounts for the share of orders you cannot resell, which can be higher in dropshipping if supplier quality is inconsistent.

To lower your break-even ROAS: negotiate product prices, increase average order value through bundles or upsells, or reduce fulfilment costs by switching suppliers. Every dollar you remove from the cost column lowers your break-even line.

Break-even ROAS vs target ROAS, MER and POAS

The be roas calculator answers a single question: what is the floor? The related metrics each answer something different:

• Target ROAS is the ROAS you set in your campaign to achieve a specific profit margin above zero. Use the "Target profit margin %" field above to calculate yours. Add a target profit margin under Check your ads and it also works as a target ROAS calculator. Target ROAS is always higher than break-even ROAS.
• MER (marketing efficiency ratio) is total revenue divided by total ad spend across all channels, blending paid and organic performance. MER tells you how the whole machine is performing, not whether a single ad is profitable.
• POAS (profit on ad spend) is ad-attributed profit divided by spend. Because it uses profit rather than revenue, POAS accounts for margin directly. Your break-even ROAS corresponds to a POAS of 0.

The right starting point is always your break-even ROAS. Once you know the floor, set your target ROAS above it, track your MER to watch overall efficiency, and use POAS when margin complexity makes revenue-based metrics misleading.

To work out how much you can spend to hit a revenue or profit goal, use our Facebook Ad Cost Calculator.

Frequently asked questions