Break-Even ROAS Calculator
The return on ad spend you need to break even — and the target that actually delivers a profit, given your margin and repeat rate.
Break-even ROAS is 1 divided by the contribution margin.
How the break-even roas calculator works
Break-even ROAS is 1 divided by the contribution margin. At a 40% margin you need 2.5:1 just to cover the ad spend; at 20% you need 5:1.
Most advertisers set a target without doing this and then wonder why a "good" 3:1 is losing money. The repeat-purchase row extends it: if a customer buys three times, the acquisition can afford a much lower first-order ROAS.
Formula: break-even ROAS = 1 / contribution margin
Worked examples
| Inputs | Break-even ROAS | Note |
|---|---|---|
| A 40% margin | 2.5 | needs 2.5:1 to break even |
| A 20% margin | 5 | needs 5:1 — a 3:1 loses money |
| With repeat purchases | 2.5 | the first order can run far lower |
FAQFrequently asked questions
What ROAS do I need to break even?
One divided by your contribution margin. At 40% that is 2.5:1; at 25% it is 4:1.
Why is a 3:1 ROAS not automatically good?
Because it depends entirely on the margin. On a 20% margin, 3:1 loses 1.67% of revenue on every sale.
Should I use gross or contribution margin?
Contribution — after cost of goods, shipping, payment processing and anything else that scales per order. Gross margin overstates the room.
How do repeat purchases change it?
They let the first order run at a loss. If a customer averages three orders, a first-order ROAS below break-even can still be profitable overall.
What is the maximum CPA?
Contribution margin times lifetime orders times order value. Anything above that loses money on the customer.
Where these figures come from
- APICS / ASCM — inventory management terminology — the turnover, safety stock and reorder point definitions used here
- US Federal Trade Commission — the US consumer protection regulator
Last checked: September 2026. These are standard retail and inventory-management definitions.