Vertical Financials
Marketing Metrics

Break-Even ROAS

Definition

The minimum ROAS you need before ad spend starts generating profit. Below it, every sale from ads loses money after product and selling costs.

Formula

Break-Even ROAS = 1 ÷ Contribution Margin % before ad spend

Break-even ROAS turns your margins into a target for your ad team. It gives them a clear line: above it ads make money, below it they do not.

It is different for every product, because margins differ, and it changes whenever costs or fees move. Watch for: one break-even ROAS used across all products, which lets low-margin items drain your ad budget.

Example

If you keep 40% of each sale after COGS, fees and fulfillment, break-even ROAS is 1 ÷ 0.40 = 2.5.

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