Why it matters
Break-even ROAS turns "we need a good ROAS" into a line you can manage to. Above it, each order pays for its own costs and its ads. Below it, every sale you buy loses money. It also gives you your maximum cost per purchase, because the margin left on an order is exactly what you can afford to pay Meta to win it.
How to calculate it
- Start with the price the customer pays. Use the same definition of revenue your pixel reports: if the purchase value includes GST or a shipping charge, include it here and count the tax as a cost.
- Subtract every cost that comes with one order — product, packaging, shipping, payment fees and an allowance for returns or refused cash-on-delivery orders.
- What's left is your contribution margin per order.
- Divide the price by that margin.
A shortcut: break-even ROAS = 1 ÷ contribution margin %. A 40% margin gives 2.5. A 25% margin gives 4.0. The break-even ROAS calculator runs these steps and also shows your maximum CPA and profit per order.
Worked example
Example: a ₹999 herbal tea gift box.
| Line | Amount |
|---|---|
| Selling price | ₹999 |
| Product cost | ₹349 |
| Packaging | ₹30 |
| Shipping | ₹120 |
| Payment fees | ₹20 |
| Returns and RTO allowance | ₹80 |
| Contribution margin | ₹400 |
Break-even ROAS = 999 ÷ 400 ≈ 2.5, and the maximum CPA is ₹400. If you want ₹150 profit per order, your target ROAS becomes 999 ÷ (400 − 150) ≈ 4.0.
What's a good break-even ROAS?
The lower it is, the more room you have. At a break-even ROAS of 1.5, a fairly ordinary campaign can make money. At 5, Meta has to find buyers very efficiently just to stand still. If yours is high, the fix may be price, bundles or product cost rather than ads. Raising average order value is often the quickest lever, because shipping and packaging get spread across more revenue.
How to use it
- Set your target ROAS above break-even by the profit you need per order.
- Use your maximum CPA as the stop-loss for tests.
- Recalculate whenever prices, discounts, courier rates or product costs change.
- Work out a separate figure for products with very different margins.
For a longer walkthrough, read how to calculate break-even ROAS.
Common mistakes
- Subtracting only product cost and forgetting shipping, fees and returns, which makes break-even look lower than it really is.
- Mixing GST-inclusive revenue with GST-exclusive costs.
- Treating break-even as the target. It's the floor. Brands with strong repeat purchase sometimes go below it on the first order on purpose — see customer lifetime value.
Frequently asked questions
How do I calculate break-even ROAS?
Subtract every per-order cost — product, packaging, shipping, payment fees and a returns allowance — from your selling price to get your contribution margin. Then divide the price by that margin. A ₹1,000 product with ₹400 left after costs has a break-even ROAS of 2.5.
What is the difference between break-even ROAS and target ROAS?
Break-even ROAS is the point where ads neither make nor lose money on an order. Target ROAS sits above it to leave the profit you want. With a ₹1,000 price and ₹400 margin, a target ROAS of 4.0 means spending ₹250 of ads per order and keeping ₹150 as profit.
Does break-even ROAS include fixed costs like salaries?
Usually not. Break-even ROAS covers the costs that come with each order, so it tells you whether each sale pays for itself and its ads. Fixed costs such as salaries, rent and software have to come out of the profit above break-even, so set your target high enough to cover them at your expected volume.
