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Break-Even ROAS Calculator

Work out the minimum ROAS your store needs to stop losing money on ads, and the ROAS you need to actually hit your profit target.

Built for Australian e-commerce. Handles GST, payment fees and refunds properly, unlike the copy-paste calculators most agencies use. No signup, no email gate, nothing leaves your browser.

What is break-even ROAS?

Break-even ROAS is the return on ad spend at which the revenue from a campaign covers its costs and no more. Below it you are losing money on every sale. Above it you are making profit, but how much depends on how far above you go.

The formula is simple:

Break-even ROAS = 1 ÷ profit margin

A 40% margin means a 2.5x break-even. A 25% margin needs 4.0x. A 10% margin needs 10x, which is why razor-thin margin stores struggle so much with paid ads.

The formula is easy. Applying it honestly is the hard part. Most store owners over-estimate their margin because they forget about GST, payment fees and returns. That makes their break-even ROAS look lower than it really is, and campaigns that look profitable are actually leaking money.

Why profit margin matters more than revenue

Two stores can run the same $10,000 ad spend and see the same 3x ROAS. One prints money. The other quietly loses thousands a month. The difference is margin.

StoreMarginBreak-even ROASAt 3x ROAS
Fashion brand65%1.5xHighly profitable
Homewares45%2.2xProfitable
Consumer electronics25%4.0xLosing money
Low-margin resale15%6.7xLosing money badly

This is why chasing industry-average ROAS benchmarks is a trap. A “good” ROAS for your business is the ROAS above your break-even, not the ROAS a case study on LinkedIn quoted.

Three mistakes that make your ROAS look better than it is

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Using GST-inclusive revenue

If you are GST registered, the revenue Google Ads or Shopify shows you includes 10% GST that you have to give back to the ATO. That inflates your ROAS by roughly 9%. On a marginal campaign, that is the difference between "keep scaling" and "pause it".

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Ignoring payment processor fees

Stripe, PayPal and Afterpay take 2-6% of every transaction. On a 25% margin business, losing another 3% to fees knocks your effective margin down to 22% and pushes your break-even ROAS from 4.0x to 4.5x. Small on paper, big at scale.

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Forgetting refunds and returns

Refunds happen after the ROAS number is calculated. A 10% return rate means 10% of your reported revenue never actually lands in your bank account. Fashion and homewares stores routinely see 15-25% return rates. Bake this into your break-even or you will scale a campaign that is quietly bleeding.

Break-even ROAS questions people ask

What is break-even ROAS?+
Break-even ROAS is the minimum return on ad spend at which the revenue from a campaign covers its costs. It is calculated as 1 divided by your profit margin as a decimal. If your margin is 40%, your break-even ROAS is 2.5x, meaning every $1 spent on ads must generate at least $2.50 in revenue to avoid losing money. Anything below break-even is unprofitable, no matter how good the ROAS looks on paper.
How do you calculate break-even ROAS?+
The formula is: break-even ROAS = 1 / profit margin (as a decimal). For a 25% margin, that is 1 / 0.25 = 4.0x. For a 50% margin, that is 1 / 0.50 = 2.0x. In reality you should also net out payment processor fees, refund rates and GST if your revenue figure is GST-inclusive. The calculator above handles all of that in the advanced inputs.
What is a good ROAS for e-commerce?+
A good ROAS depends entirely on your margin. A 3x ROAS on a 70% margin fashion brand is very profitable. A 3x ROAS on a 20% margin electronics retailer is a loss. That is why break-even ROAS matters more than any industry average. Aim for a ROAS meaningfully above your break-even so there is room for fixed costs, salaries and profit, not just breakeven survival.
Does GST affect my break-even ROAS?+
Yes, if you are GST registered in Australia. If your reported ad revenue includes 10% GST that you have to remit to the ATO, your real revenue is roughly 9.1% lower than the number Google or Shopify shows. That pushes your break-even ROAS higher. The calculator above has a GST toggle to net it out automatically.
Should I use gross margin or net margin?+
Use gross margin: the percentage left after cost of goods sold, before overheads and advertising. Overheads and fixed costs are handled separately in the advanced inputs. Using net margin (post-everything) will make your break-even ROAS look far higher than it really is and cause you to under-invest in profitable campaigns.
What if my ROAS is above break-even but I am still not profitable?+
Break-even ROAS covers the direct cost of goods and ad spend, but not fixed overheads like rent, software, salaries and contractors. That is what the target ROAS field is for: enter your desired monthly profit and fixed overheads, and the calculator tells you the ROAS you need to hit that target. If you are hitting break-even but not target, either scale efficient campaigns, lift AOV, or trim overheads.

Want the deeper explainer?

How to calculate break-even ROAS (properly) →

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