How to use it
Choose how to start. My margin takes the share of each sale left after product and order costs. Price and costs works that margin out for you from one order's selling price, product cost and other per-order costs such as shipping, packaging and payment fees.
Two optional boxes add more:
- Profit you want after ads. A target, as a share of revenue. The calculator returns the ROAS you need to hit it.
- Your current ROAS. It says whether you are above or below break-even and how much profit or loss each unit of ad spend produces now.
The formula
At break-even, the gross profit from ad-driven sales exactly pays for the ads. With margin m (as a decimal):
revenue × m = ad spend
Break-even ROAS = revenue ÷ ad spend = 1 ÷ m
Break-even ACoS = m × 100%
For a profit target t, also a share of revenue, the ads may only use up what is left after it:
revenue × (m − t) = ad spend
Target ROAS = 1 ÷ (m − t)
And at any ROAS r, the profit each unit of spend produces is r × m − 1.
Worked example
A product sells for $60. It costs $22 to make and $8 to ship and process, so $30 is left: a 50% margin.
- Break-even ROAS = 1 ÷ 0.50 = 2.00x. Break-even ACoS = 50%.
- To keep 15% of revenue as profit after ads: 1 ÷ (0.50 − 0.15) = 1 ÷ 0.35 = 2.86x.
- The campaign is running at 2.4x. Each $1 of ads brings $2.40 of revenue and $1.20 of gross profit, so it makes $0.20 per $1 spent, which is 8.33% of revenue.
Same product with a 40% margin and a 2.2x ROAS: 2.2 × 0.40 − 1 = −$0.12. Every $1 of ads loses 12 cents, even though a 2.2x ROAS sounds healthy.
Break-even ROAS by margin
These follow directly from 1 ÷ margin. They are arithmetic, not benchmarks.
| Margin before ads | Break-even ROAS | Break-even ACoS |
|---|---|---|
| 10% | 10.00x | 10% |
| 20% | 5.00x | 20% |
| 25% | 4.00x | 25% |
| 30% | 3.33x | 30% |
| 40% | 2.50x | 40% |
| 50% | 2.00x | 50% |
| 60% | 1.67x | 60% |
| 70% | 1.43x | 70% |
| 80% | 1.25x | 80% |
The curve is steep at the low end. Halving a 20% margin to 10% doubles the break-even ROAS from 5x to 10x, which is why low-margin products struggle with paid ads.
What to count in the margin
Count every cost that rises with each order: the product, shipping you pay, packaging, payment processing, marketplace fees, and an allowance for returns if they are common. Leave out fixed costs such as rent and salaries; those belong in a full profit-and-loss view, not in the per-order margin that ad spend has to clear. If you pay an agency a percentage of ad spend, add it to the ad spend instead.
One-off sale or a customer for life
Break-even ROAS assumes the first order has to pay for the ad. If customers come back and buy again without more ad spend, you can afford a lower first-order ROAS. That is a deliberate bet on customer lifetime value, and it is worth writing down how long the payback takes before making it.
How this calculator handles your numbers
The margin is worked out as an exact fraction from your price and costs, so a $60 price with $30 of costs gives exactly 50%. ROAS results show two decimals with an x, money and percentages two decimals, rounded half away from zero. A margin of zero or less, a margin above 100%, or a profit target at or above the margin cannot produce a sensible ROAS, and the calculator says so instead.