How to calculate your Breakeven ROAS: The ultimate guide
Discover how to identify the exact point where your ads start making money. Stop losing budget today.
Understanding your Breakeven ROAS is the difference between a profitable business and one that loses money on every sale.
What is Breakeven ROAS?
It is the point where your revenue from a sale exactly covers all your costs (product, ads, taxes). If your ROAS is below this number, you are losing money. If it’s above, you are in profit.
The Formula
To calculate it, you first need your Gross Margin %:
Gross Margin % = (Net Sale Price - COGS) / Net Sale Price
Then, your Breakeven ROAS is:
Breakeven ROAS = 1 / Gross Margin %
Example
If you sell a product for $100 and it costs you $40 to produce and ship:
- Gross Margin = $60
- Gross Margin % = 60% (0.6)
- Breakeven ROAS = 1 / 0.6 = 1.66x
This means for every $1 you spend on ads, you need to generate at least $1.66 in revenue just to not lose money.
Why use our calculator?
Manual calculations can lead to errors, especially when taxes like VAT are involved. Our Ads Calculator does this for you automatically.