Soku AIBreak-Even ROAS Calculator
Break-even ROAS is the line between profit and loss. Below it, a campaign costs you money no matter how good the revenue looks. Enter your margin to find it.
Break-Even ROAS Calculator
Contribution margin before ad spend — revenue minus COGS, shipping, fees.
You need at least 2.5× ROAS to avoid losing money. Anything above is profit.
Break-even ROAS = 1 ÷ Gross margin (as a fraction). Example: 40% margin → 1 / 0.40 = 2.5×.
Formula
Break-even ROAS = 1 ÷ Gross margin
Gross margin is entered as a percentage and applied as a fraction (40% → 0.40). This assumes gross margin is your contribution margin before ad spend — revenue minus COGS, shipping, and transaction fees. The result is the ROAS at which ad revenue exactly covers ad cost.
Worked example
Your product carries a 40% gross margin. Break-even ROAS = 1 ÷ 0.40 = 2.5×. Any campaign below 2.5× ROAS loses money; above it, every extra multiple is profit.
What this tells you
Every target ROAS should start here. Break-even ROAS converts your margin into the exact revenue multiple a campaign must return to avoid losing money. A high-margin product breaks even at a low ROAS and can scale aggressively; a thin-margin product needs a high ROAS just to stay flat. Knowing this number stops you from celebrating a “good” ROAS that’s actually underwater.
Benchmarks
Break-even ROAS at common gross margins — your target should sit comfortably above it.
| Gross margin | Break-even ROAS |
|---|---|
| 20% | 5.0× |
| 40% | 2.5× |
| 60% | 1.7× |
| 80% | 1.25× |
Directional ranges only — your targets depend on margins, business model, and stage.
Common mistakes
Plugging in net margin (after ad spend) instead of contribution margin before ad spend.
Entering margin as a whole number instead of a percentage of revenue.
Setting your target ROAS at break-even — that leaves zero profit.
Forgetting returns, discounts, and payment fees, which lower true margin.
When to use it
- Setting a floor for target ROAS before launching a campaign
- Deciding whether a live campaign is actually profitable
- Comparing how aggressively different products can scale
FAQ
Why is break-even ROAS 1 ÷ margin?
If your margin is 40%, then 40 cents of every revenue dollar is available to cover ad cost. To break even, ad spend must equal that margin — which happens at a revenue multiple of 1 ÷ 0.40 = 2.5×.
Should margin include ad spend?
No. Use contribution margin before advertising — revenue minus COGS, shipping, and fees, but not the ad cost itself. The calculation is solving for the ad cost the margin can absorb.
What target ROAS should I set above break-even?
That depends on your profit goals and how much you want to reinvest. Many teams target 1.3–2× their break-even ROAS to leave healthy margin while still scaling.
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