Break-Even ROAS

Break-even ROAS is the point where the revenue an ad brings in exactly pays for the ad spend and the cost of fulfilling those orders. Below it you are losing money on every sale; above it you start keeping some. It is set by your own margins, not by the ad platform, so every store has a different one.

It is not ROAS itself. ROAS is what your campaign actually returned last week; break-even ROAS is the line you are measuring that return against. It is also not MER, which looks at total revenue over total spend across the whole business rather than the threshold a single campaign has to clear.

Divide one by your contribution margin expressed as a decimal. If you keep 40% of each order after costs, break-even ROAS is 1 ÷ 0.40 = 2.5. The honest denominator subtracts product cost, shipping, payment fees, pick-and-pack and expected returns. The flattering one subtracts product cost only, which lowers the threshold and makes weak campaigns look profitable. Use the honest version, because the flattering one hides real money leaving your bank account.

ROAS is the figure your campaign actually produced; this term is the threshold it must beat. Contribution Margin is the input that sets that threshold. MER measures blended return across all spend rather than one campaign. CAC asks what a new customer costs in cash, and LTV tells you whether you can afford to sit below break-even on first orders.