Break-even ROAS (Return on Ad Spend) Calculator 

In digital advertising, there is one metric that deserves special attention and that is Break-even ROAS. It’s more than a number. It’s a line that represents the difference between profitability from financial loss. And knowing how to calculate it can save you from investing in ads that don’t give you the returns you want.

What is Break-even ROAS?

ROAS (Return on Ad Spend) tracks how much revenue you earn for the amount of money you spend on advertising. 

The formula is: 

Revenue from Ads/Cost of Ads

However, not all ROAS values are the same. That’s when you use Break-even ROAS. Break-even ROAS tells you the minimum amount to cover costs. Above this amount means profit, and anything below means loss.

Why is Break-even ROAS Important?

In addition to running ads, you have to also ensure those conversions are profitable. Even with a high conversion rate, high ad costs on low-margin products can lead to a loss. Break-even ROAS provides a crucial benchmark for evaluating and improving ad performance. 

The formula is: 

1 / Profit Margin

  • Profit Margin = (Revenue – COGS) / Revenue

For example: 

  • Product sells for 100
  • COGS (Cost of Goods Sold) is 60
  • Profit Margin is (100/60)/100 = 0.4 (40%)

So Break-even ROAS is 

1/0.4 = 2.5

Therefore, you need to make 2.5 in revenue for every 1 spent on ads just to break even. 

When to Use It

  • Budget planning and forecasting
  • When setting bids on Google Ads and Meta Ads
  • Before launching new ad campaigns
  • When testing different prices or discounts

Final Thoughts

Using Break-even ROAS helps you make smarter, data-driven decisions. This is where profitable growth ignites and is the cornerstone for sustainable growth.