Break-even ROAS = selling price / margin per order before adsBreak-even ROAS is the return on ad spend a product needs before its ads stop losing money. At exactly that ROAS, the margin from each sale pays for the ads and nothing is left.
It turns ROAS from a vague score into a clear target. If your break-even ROAS is 2.5 and a campaign runs at 2, it loses money however good it looks. At 3.5, it earns a profit you can scale.
To work it out, start from the selling price and subtract every cost of a sale except advertising: the product (COGS), shipping and fulfillment, payment and platform fees, and packaging. What remains is your margin before ads. Divide the price by that margin.
- A higher margin lowers the break-even ROAS and gives your ads more room.
- Raising prices, cutting product or shipping costs and selling bundles all help.
- Products with thin margins can need a ROAS too high to reach with paid traffic.
Common mistakes: leaving out fees or returns, using one break-even figure for products with different margins, and aiming for break-even itself. Break-even only covers the sale. Fixed costs such as apps, tools and salaries still need paying, so plan for a ROAS above it.