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Break-even ROAS calculator

Find the return on ad spend where your ads stop losing money, the ROAS you need for your target profit, and whether a campaign is above or below the line.

Your order economics

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Marketplace commission, returns allowance
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Share of revenue you want to keep

A campaign to check (optional)

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Contribution margin
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Break-even ROAS
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Target ROAS
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Campaign ROAS
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Profit after ads
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Verdict
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Ad Profit Planner (.xlsx), $19

Your break-even and target ROAS, target CPA, max CPC and lifetime CAC in one Excel workbook, plus a campaign tracker that flags every campaign losing money and a monthly budget plan.

$19Not available to buy online at the moment. What's in it

Need the margin first? Work it out with the free Shopify profit margin calculator.

Formulas

Contribution per order = AOV − product cost − shipping − AOV × payment fee % − fixed fee − AOV × other % Contribution margin = contribution per order ÷ AOV ROAS = revenue ÷ ad spend Break-even ROAS = 1 ÷ contribution margin Target ROAS = 1 ÷ (contribution margin − target profit %) Profit after ads = revenue × contribution margin − ad spend

Worked example

Average order $60, product cost $24, shipping $6, payment fee 3% + $0.30. Contribution per order = 60 − 24 − 6 − 1.80 − 0.30 = $27.90, a 46.5% contribution margin. Break-even ROAS = 1 ÷ 0.465 = 2.15. To keep 15% of revenue, target ROAS = 1 ÷ (0.465 − 0.15) = 3.17. A campaign with $500 of spend and $1,800 of revenue has a ROAS of 3.6 and makes $1,800 × 0.465 − $500 = $337 after ads.

Next: the max CPC calculator turns the same numbers into the most you can bid per click.

Questions

What is break-even ROAS?

The return on ad spend at which the profit from ad-driven sales exactly pays for the ads. Break-even ROAS = 1 ÷ contribution margin. With a 46.5% contribution margin it's 2.15: every $1 of ads must bring $2.15 of revenue.

How do I calculate ROAS?

ROAS = revenue from ads ÷ ad spend. $1,800 of sales from $500 of ads is a ROAS of 3.6 (often written 3.6× or 360%).

What ROAS do I need to make a profit?

Target ROAS = 1 ÷ (contribution margin − target profit). To keep 15% of revenue as profit with a 46.5% contribution margin, you need a ROAS of 1 ÷ 0.315 = 3.17.

Why use contribution margin, not gross margin?

Because payment fees, shipping and packing are paid on every order the ads bring in. Leaving them out makes ads look more profitable than they are.