Break-even ROAS calculator
This calculator needs JavaScript. The formula and the worked example on this page show how it works.
Profit before ad spend, as a share of revenue.
Result
Enter a value above 0 in each field.
Formula
Break-even ROASBreak-even ROASThe return on ad spend at which ad revenue exactly covers the ad spend and the other costs of each sale, so the campaign makes no profit and no loss. Glossary = 1 / profit margin
Profit margin = (revenue - costs before ad spend) / revenue, entered as a percentage
What is break-even ROAS?
Break-even ROASROAS (return on ad spend)The revenue a campaign earns for each dollar spent on ads. Glossary is the return on ad spend at which the profit from a sale exactly pays for the ads that produced it. Below that point, every sale the ads bring in loses money once ad spend is counted. Above it, the campaign makes a profit.
The break-even ROAS formula is 1 divided by the profit margin, with the margin written as a decimal. The lower your margin, the more revenue each dollar of ad spend has to bring back before the campaign breaks even.
What profit margin means here
The margin in this calculator is your profit before ad spend, as a share of revenue. Take the revenue from a sale, subtract every cost of delivering it except advertising (the product or service, payment fees, shipping, labor, commissions), and divide what is left by the revenue.
Do not use your net profit margin after advertising. That figure already has ad spend taken out, so using it here counts the ad cost twice and gives a break-even ROAS that is too high.
Example (made-up numbers)
Revenue of $1,000 and $750 of costs before ad spend: ($1,000 - $750) / $1,000 = 25% profit margin.
Break-even ROAS at a 25% margin: 1 / 0.25 = 4.00:1, or 400%.
At a 50% margin: 1 / 0.50 = 2.00:1, or 200%.
How to use the break-even ROAS calculator
- Work out your profit margin before ad spend, using the method above.
- Enter it as a percentage, so a margin of one quarter is 25.
- Read the break-even ROAS as a ratio and a percentage.
- Compare it with the actual ROAS from your campaign, which the ROAS calculator works out from revenue and ad spend.
Use Copy result to paste the figure into a report, or Clear inputs to start again.
How to read the result
The result is the minimum ROAS the campaign needs. If your actual ROAS is above it, the ads produce profit after their own cost. If it is below, the ads cost more than the profit they bring in. If they are equal, the campaign neither makes nor loses money on the sales it tracks.
If every dollar of revenue is profit before ads (a margin of 100, the highest the calculator accepts), the break-even ROAS is 1.00:1. That is the lowest break-even ROAS possible. Any lower margin raises it.
If you are a publisherPublisherA company or individual that generates leads, usually through websites, ads or content, and sells them to brokers or buyers. Glossary paid per lead and your only costs besides ads are tracking, hosting and tools, your margin is close to the full amount you are paid, and your break-even ROAS is close to 1.00:1. Count those costs anyway, or the result will be too low.
Common break-even ROAS mistakes
- Using net margin after ads. The margin must be before ad spend, or the ad cost is counted twice.
- Leaving out costs per sale. Payment fees, returns, refunds and commissions all reduce the margin and raise the break-even ROAS.
- Using one margin for a mixed product range. If items carry different margins, use the margin of what the campaign actually sells, weighted by revenue.
- Treating break-even as the target. Break-even means no profit. Set your target ROAS above it.
Embed this calculator
You can add this break-even ROAS calculator to your own site. Copy the code below and paste it into your page. It loads the calculator in a frame and includes a credit link to this page.
Frequently asked questions
What is break-even ROAS?
It is the return on ad spend at which the profit from sales exactly covers the ad spend. Below it, the campaign loses money; above it, the campaign is profitable.
What is the break-even ROAS formula?
Break-even ROAS = 1 / profit margin, with the margin written as a decimal. Multiply the result by 100 to show it as a percentage.
Should I use gross margin or net margin?
Use your margin before ad spend: revenue minus every cost except advertising, divided by revenue. Net margin after ads already includes the ad cost.
How is break-even ROAS different from ROAS?
ROAS is what a campaign actually returned. Break-even ROAS is the lowest return the campaign needs to avoid a loss. Compare the two to see whether the ads pay for themselves.
Related tools
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What happens next
- Step 1: You email us.
- Step 2: We reply by email.
- Step 3: Every publisher is reviewed, and return and payment terms are agreed during onboarding, before you go live.
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