Metrics & NumbersBreak-even ROAS
What is Break-even ROAS? How to Find Your ROAS Floor
Also known as: break even ROAS, minimum ROAS, BER
Short answer
Break-even ROAS is the lowest ROAS at which your ads neither profit nor lose. It comes from your margin: a 25% margin gives a break-even ROAS of 4. Below that line, every extra sale adds to the loss.
Formula
Break-even ROAS = 1 / Gross Margin
Example
Gross margin is 25% (0.25). Break-even ROAS = 1 / 0.25 = 4. A ROAS of 3.5 loses money. A ROAS of 5 profits.
The table worth keeping
| Gross margin | Break-even ROAS |
|---|---|
| 20% | 5.0 |
| 25% | 4.0 |
| 30% | 3.3 |
| 40% | 2.5 |
| 50% | 2.0 |
| 70% | 1.4 |
Find your margin row. The number beside it is your floor. Anything below means you are paying to make sales.
How to use it
- Calculate break-even ROAS once, then post it where the ads team sees it daily.
- Set a target ROAS above break-even, with enough gap to cover fixed costs.
- Fix or switch off any campaign that stays below break-even for two weeks.
Common mistakes
- Using the wrong margin. A margin taken before shipping makes break-even ROAS look easier than it is.
- Forgetting discounts. A 20% coupon lowers margin, so your break-even ROAS rises while the promotion runs.
- Calculating on leaking conversion data. If conversions are not fully sent, the ROAS you measure is understated, and you may kill a campaign that actually profits.
Frequently asked questions
- Why do I need this number?
- Without break-even ROAS you have no basis for deciding when to switch a campaign off. A ROAS of 3 can be excellent for one business and ruinous for another. This number turns a feeling into a clear line.
- Which margin do I use, gross or net?
- Use gross margin for daily decisions: price minus cost of goods and direct costs such as shipping. Use net margin when you calculate monthly ROI, because it includes fixed costs.
- What if my business has repeat purchases?
- Calculate break-even ROAS from LTV, not from one transaction. You may lose money on the first purchase if the second and third cover it. Set that line deliberately, not by forgetting to do the maths.
Related terms
Your ad numbers are only as accurate as the data behind them
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