Break-even ROAS calculator
The lowest ROAS at which a sale bought with ads costs you nothing, worked out with what an order really costs: VAT, Shopify fees, shipping, returns, contributions. Do it before you launch your ads.
Why “price ÷ margin” gets it wrong
The short formula divides the price by the gross margin, the price before VAT minus the product cost. Here is what it leaves out, cost by cost, on a €39.00 order, the calculator’s example.
| What you take off | Amount | Left before ads | Break-even ROAS |
|---|---|---|---|
| VAT (20%) | −€6.50 | €32.50 | 1.20 |
| Product costWhere the short formula stops | −€9.00 | €23.50 | 1.66 |
| Shipping and packaging | −€6.00 | €17.50 | 2.23 |
| Payment fees and Shopify subscription | −€1.08 | €16.43 | 2.37 |
| Returns (5% of orders)Your real break-even ROAS | −€1.18 | €15.25 | 2.56 |
| Micro-entreprise contributions (12.4% of turnover)If you run a French micro-entreprise | −€3.83 | €11.42 | 3.41 |
ROAS is read here on the price including VAT. If your ad platform measures sales before VAT, divide the price before VAT by what is left: €32.50 ÷ €15.25 = 2.13.
What is break-even ROAS?
ROAS (return on ad spend) divides the revenue credited to your ads by what you spent on them. Break-even ROAS is the point where a sale won through ads neither makes nor loses money: everything the order had left went into the ad.
You get it by dividing the selling price by what you have left before advertising, your maximum CPA. On the calculator’s €39 candle, €15.25 is left before ads: 39 ÷ 15.25 = 2.56. At that ROAS, each sale costs €15.25 in ads and earns nothing. Above it, every sale makes money. Below it, every sale loses some.
Before or after VAT: which price to use?
Your break-even ROAS has to use the same basis as the ROAS your ad platform shows. It measures the purchase value your store sends it, which may or may not include VAT and shipping depending on your setup.
To check, place a test order and compare the value reported in your ads manager with the order total in Shopify. If the value includes VAT, keep 2.56. If it doesn’t, divide the price before VAT: 32.50 ÷ 15.25 = 2.13. That 20% gap is enough to switch off a profitable campaign or keep one that loses money.
Break-even ROAS or target ROAS?
At your break-even ROAS you earn nothing: it is a floor, not a goal. To keep a margin, take it off what is left before ads, then divide again.
To keep a 20% net margin on the candle, set aside 20% of the €32.50 before VAT, so €6.50. That leaves 15.25 − 6.50 = €8.75 for ads, a target ROAS of 39 ÷ 8.75 = 4.46. The calculator gives it for whatever margin you pick.
What lowers your break-even ROAS
Anything that raises what is left before ads lowers the threshold. On the candle example, one lever at a time:
Raise the basket. A 2-pack at €69 pays shipping, packaging and the subscription only once: €30.00 is left before ads and the threshold drops to 2.30, against 2.56 for a single candle.
Charge for shipping. If customers pay for shipping on top of the product, it leaves your costs: €19.75 is left and the threshold, on the product price, drops to 1.97.
Keep returns down. With 15% of orders returned instead of 5%, only €12.90 is left and the threshold climbs to 3.02.
Count your contributions. In a French micro-entreprise, 12.4% of turnover goes to contributions and the threshold moves from 2.56 to 3.41. Leaving them out means keeping campaigns that lose money while they look profitable.
Why the ROAS your ads show isn’t enough
Your ad platform’s ROAS counts the sales it credits to itself, at the moment of purchase. It sees neither the returns that come later, nor your fees, nor the sales that would have happened without the ad.
So keep some room above your threshold, and track your total revenue divided by your total ad spend each month, the MER. If it falls while the reported ROAS rises, the platform is crediting itself with sales that would have come anyway.
The ROAS formulas
To redo by hand or in your spreadsheet. The examples use the calculator’s €39 candle.
Maximum CPA
Price incl. VAT − VAT − product − shipping − packaging − fees − subscription ÷ orders − returnsWhat is left before ads: €15.25. The most one sale can cost in advertising without a loss.
Break-even ROAS
Price incl. VAT ÷ maximum CPA39 ÷ 15.25 = 2.56. At this ROAS, a sale earns nothing and costs nothing.
Target ROAS
Price incl. VAT ÷ (maximum CPA − target margin × price before VAT)For a 20% net margin: 39 ÷ (15.25 − 6.50) = 4.46.
ROAS
Revenue credited to ads ÷ ad spend€4,000 in sales for €1,000 in ads is a ROAS of 4, also written 400%.
MER
Total revenue ÷ total ad spendAll sales and all platforms over a period. It depends on no attribution.
POAS
Profit before ads ÷ ad spendProfit per unit of ad spend. It breaks even at 1 whatever your margin: €15.25 left before ads for €15.25 spent.
Your threshold is set. Does your store convert?
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What merchants ask us most about break-even ROAS.
How do I calculate break-even ROAS?
Divide your selling price by what you have left before advertising. To get that, take VAT, product cost, shipping, packaging, payment fees, your share of the subscription, returns and, for a French micro-entreprise, contributions off the price. For a €39 product that leaves €15.25 before ads, break-even ROAS is 39 ÷ 15.25 = 2.56.
What is a good ROAS?
There is no universal good ROAS: it depends on your margin. A ROAS of 3 loses money for a store whose threshold is 3.41 and makes money for one whose threshold is 2. Work out your break-even ROAS first, then your target ROAS for the margin you want to keep.
What’s the difference between break-even ROAS and maximum CPA?
They are the same threshold, expressed differently. Maximum CPA is what a sale can cost in ads without a loss, in money: €15.25 in the example. Break-even ROAS is the price divided by that CPA: 2.56. Use the one your campaign optimizes for, cost per purchase or ROAS.
Should ROAS be calculated before or after VAT?
On the same basis as your ad platform. Compare the value of a test order in your ads manager with its total in Shopify: if it includes VAT, calculate on the price including VAT, otherwise before VAT. In the example, the threshold is 2.56 with VAT and 2.13 without.
Why do I lose money with a ROAS above 1?
A ROAS of 1 means the ads cost as much as the sale brought in: VAT, the product, shipping and fees are still to pay. Your real threshold is your break-even ROAS, almost always well above 1. In the example, it takes 2.56 to lose nothing.
Do bundles change break-even ROAS?
Yes. Shipping, packaging and the subscription are paid once per order, however many products it holds. A bigger basket leaves more money before ads: in the example, a 2-pack at €69 breaks even at 2.30, against 2.56 for a single unit at €39. The calculator weighs each offer by its share of your orders.
What is POAS?
POAS (profit on ad spend) divides profit before ads by ad spend, instead of revenue. It always breaks even at 1 whatever your margin, which makes it easy to read. ROAS stays more common because ad platforms show it directly.