Break-even ROAS Calculator
Determine the minimum ROAS required to break even after accounting for gross margin and other variable costs.
Fulfillment, returns, payment fees, etc.
Break-even ROAS
2.00:1
Recommended Target ROAS (20% buffer)
2.40:1
Break-even ROAS
2.0:1
Minimum ROAS to cover COGS at your gross margin (1 ÷ margin)
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How it works
Break-even ROAS tells you the minimum return needed to cover product costs. If your gross margin is 50%, you need at least 2:1 ROAS to break even on COGS. Add operating costs for a full profitability target.
Frequently Asked Questions
What is break-even ROAS?
Break-even ROAS is the minimum return on ad spend needed to cover your cost of goods sold (COGS), the point where ad-driven revenue pays for product delivery, not yet profit. If your gross margin is 50%, break-even ROAS is 2:1 ($2 revenue per $1 ad spend). Any ROAS below that loses money on variable costs alone.
How do you calculate break-even ROAS?
Divide 1 by your gross margin as a decimal: Break-even ROAS = 1 ÷ Gross Margin. Examples: 40% margin → 1 ÷ 0.40 = 2.5:1; 75% SaaS margin → 1 ÷ 0.75 = 1.33:1; 20% margin → 1 ÷ 0.20 = 5:1. Enter your margin in this calculator for an instant result. This formula covers COGS only, add buffer for CAC, overhead, and profit targets.
What is the break-even ROAS for SaaS?
Most SaaS products have gross margins of 70–85%, giving a break-even ROAS of roughly 1.18:1 to 1.43:1. That means SaaS ads can cover product costs at lower ROAS than e-commerce (often 40–60% margins). However, you still need to cover sales, marketing overhead, and R&D, so target ROAS well above break-even for true profitability.
What is the difference between break-even ROAS and target ROAS?
Break-even ROAS is the floor, the minimum to cover COGS. Target ROAS adds a profit buffer on top. If break-even is 1.33:1 at 75% margin, a target of 1.6:1–2:1 covers COGS plus margin for acquisition overhead and profit. For subscription businesses, target ROAS should eventually reflect LTV, not just first-purchase or first-month revenue.
Why is my ROAS above break-even but I am still unprofitable?
Break-even ROAS only covers product costs, not full acquisition or operating expenses. A 4:1 ROAS looks strong but may still lose money if margins are thin, returns and discounts are excluded, or attribution windows are too short to capture SaaS trial-to-paid revenue. Compare ROAS to break-even first, then layer in CAC payback and LTV for true ad profitability.
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