How do you calculate break-even ROAS?

The formula

Gross profit = price - product - shipping - other - (price x fee%) - fixed fee
Break-even ROAS = selling price / gross profit per order
Break-even CPA  = gross profit per order

Three lines, and the third one is the one you will actually use every day.

Step by step on a real product

• Selling price: $49.95
• Product cost from the supplier: $8.40
• Shipping to the customer: $4.60 (landed cost $13.00 together)
• Payment fee at 2.9%: $1.45
• Fixed fee per transaction: $0.30

That leaves $35.20 of gross profit per order.

Break-even ROAS: 49.95 ÷ 35.20 = 1.42. Every dollar of ad spend has to bring back $1.42 before you have made anything.

At a 2.0 ROAS you spend $24.98 in ads and keep $10.22 per order, a 20.5% net margin.

What to include, and what not to

Include everything that scales with the order: product, shipping, payment fees, per-order app fees, import VAT or GST where you collect it, expected refund cost, and any packaging insert.

Do not include:

• Your ad spend. It is the thing the ratio measures. Subtracting it double-counts.
• Your subscription. Not per-order. It belongs in monthly overhead.
• Your time. It belongs in the decision to do this at all, not in this formula.

Getting the first exclusion wrong produces a break-even ROAS that rises every time you spend more, which people then chase with worse targeting.

Break-even CPA is what you watch

Break-even ROAS is useful for comparing campaigns. Break-even CPA is what you act on, and it needs no arithmetic at all — it is your gross profit per order, $35.20 here.

That figure sits directly next to “cost per purchase” in the ads manager. No mental maths at 2am, no ratio to interpret. Above $35.20, the campaign is losing money. That is the whole rule.

The mistake this calculation exists to prevent

A $19.95 product with a $6.00 product cost looks like a 70% margin.

Then subtract $4.00 of shipping and $0.88 of fees: gross profit is $9.07 and break-even ROAS is 2.20. No cold-traffic campaign in this niche hits 2.2 reliably, so that product cannot be advertised — and the spreadsheet said it could, because the spreadsheet stopped at product cost.

Anything above 1.8 break-even ROAS is a pricing or sourcing problem, not a targeting problem. The fix is a higher price or a cheaper landed cost, and the supplier comparison is where the second one lives.

Calculate it per product, not per store

Blended numbers hide the product that is losing money.

Two products, both selling: one at $49.95 with a 1.42 break-even, one at $24.95 with $11.30 of gross profit and a 2.21 break-even. Run both at a blended 1.9 ROAS and the store looks profitable, because the good product is subsidising the bad one out of your ad budget.

Split the campaigns, calculate break-even per product, and judge each against its own line. A product that cannot clear 1.8 does not become viable by sharing a dashboard with one that can.

Once you have the number

Compare it against reality rather than against other people’s screenshots. A first test landing between 1.2x and 1.8x your break-even is normal; a winner settling at 2x-2.5x after a week of creative iteration is a good outcome. What is a good ROAS has the targets by price point, and when to scale a winning product covers what to do once you are consistently above the line.

Run your own product through the break-even calculator before you order samples. If it comes out above 1.8, put the product back — there are more products than there is testing budget.