Margin after cost of goods, before ad spend.
Marketplace or processing fee as a % of revenue.
Share of orders returned.
Shipping you absorb as a % of revenue.
Break-even ROAS
2.84
Minimum ROAS to cover costs; above it is profitable.
Contribution margin
35.15%
Margin after fees, shipping, and returns.
Max CAC as % of revenue
35.15%
Most you can spend acquiring a sale and still break even.
Estimate only — platform fees and costs vary; verify current rates. Read the full disclaimer ↓
Your break-even ROAS is the pass-fail line: the ROAS you must beat for a sale to cover its own costs. The marker sits in the band your computed floor falls into; any actual ROAS above the floor is profitable on the marginal sale, anything below it loses money.
| ROAS level | Outcome on the marginal sale | |
|---|---|---|
| Below break-even | Revenue does not cover product, fees, shipping, and returns — every sale loses money. | |
| At break-even | A sale exactly pays its own variable costs; zero contribution to fixed overhead or profit. | ◀ break-even ROAS (2.84x) |
| 1.25× to 1.75× break-even | Comfortably profitable on the margin, with a cushion building toward fixed costs. | |
| Above 1.75× break-even | Wide margin per sale — efficient, though a very high ROAS can also signal room to spend more and scale. |
Start with gross margin and subtract platform/payment fees and any shipping subsidy, all as percentages of revenue.
A product with a 40% gross margin, a 3% platform fee, a 5% return rate, and no shipping subsidy.
Margin after fees
40% - 3% - 0% = 37%
After returns
37% x (1 - 5%) = 35.15%
Break-even ROAS
1 / 0.3515 = 2.84
Max CAC as % of revenue
35.15%
You need a ROAS above 2.84 to make money on the marginal sale; a ROAS of 4 is comfortably profitable, while 2.5 loses money. A common mistake is targeting a flat ROAS like 3 without checking whether your margin actually supports it.
This calculator finds the lowest return on ad spend that still keeps a sale profitable, given your margin, fees, shipping, and returns. It reframes ROAS from a vanity number into a target with a hard line: anything above your break-even ROAS makes money on the marginal sale, anything below loses it. The chart traces how that floor shifts as margin changes, and the table fixes the line for your own inputs.
Start with gross margin, subtract platform and payment fees and any shipping you absorb, all as percentages of revenue. Multiply the result by one minus the return rate to get the contribution margin. The break-even ROAS is simply one divided by that contribution margin expressed as a fraction — a reciprocal relationship, which is why the floor climbs steeply as margins thin: at a 50% contribution margin you need a 2x return, but at 20% you need 5x, and at 10% a punishing 10x.
The inputs beyond gross margin are not rounding details; each one lifts the ROAS you must beat. Platform and payment fees skim a fixed slice off every order before any ad cost. Shipping you absorb does the same. Returns are the subtlest, because a returned order hands back the revenue while you often keep the picking, shipping, and payment-processing cost — so a 5% return rate trims more than 5% from real contribution. Every point shaved off contribution margin pushes the reciprocal up, which is how a product that looks healthy on gross margin alone can carry a surprisingly high break-even ROAS.
The break-even ROAS is a floor, not a goal, and the distinction is where money is made or lost. Clearing it means a sale pays its own variable costs, but fixed overhead — salaries, software, rent — is still entirely uncovered, so a campaign run exactly at break-even contributes nothing to keeping the lights on. Aim for a ROAS comfortably above the line, treating the gap between your target and the floor as the contribution that funds overhead and profit. The max-CAC output names the same constraint from the other side: the most you can spend acquiring a sale before it stops being worth making.
The most damaging mistake is judging campaigns by ROAS without knowing the break-even line, so a "good"-sounding ROAS of 3 can quietly be a loss on a thin-margin product whose floor is 3.5. A flat company-wide ROAS target makes this worse, because the same target is profitable for a high-margin SKU and ruinous for a low-margin one — the floor is product-specific. Others include forgetting returns, ignoring platform fees, and treating break-even as the goal rather than the minimum. ROAS alone is never success; profitability depends on margin, returns, and fees.
Performance marketers use break-even ROAS to set bid and target-ROAS values per product and to judge whether a channel is truly profitable rather than merely busy; finance teams use it to translate margin into a hard advertising constraint. It is the contribution-margin break-even framework the U.S. Small Business Administration recommends for any spend, expressed as a return multiple — each sale must clear the cost of winning it. It works hand in hand with the ROAS calculator, ad-spend planning, MER, and contribution-margin analysis.
Divide 1 by your contribution margin expressed as a fraction. With a 35% contribution margin, break-even ROAS is 1 / 0.35 = 2.86. Above that ROAS the sale is profitable.
It is the lowest return on ad spend at which the revenue from a sale exactly covers the product, fees, shipping, and return costs tied to it. Below it you lose money on each acquired sale.
ROAS is revenue per ad dollar, not profit. A ROAS of 3 can be profitable for a high-margin product and unprofitable for a thin-margin one. You must compare your ROAS to your break-even ROAS to know if you are making money.
Returns shrink your effective margin because returned orders give back revenue while often keeping some cost. A higher return rate lowers contribution margin and raises the ROAS you need to break even.
It equals your contribution margin. If your contribution margin is 35%, you can spend up to 35% of revenue acquiring a sale before it stops being profitable.
No. Break-even is the floor, not the goal. You need a ROAS above it to cover fixed overhead and earn a profit, so set targets with a margin of safety above this number.
Yes. The higher your contribution margin, the lower the ROAS you need. That is why margin improvements widen how aggressively you can advertise.
Gross margin is revenue minus cost of goods. Contribution margin here goes further, also subtracting platform fees and shipping and adjusting for returns, so it reflects what is actually left to cover ads.
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Business disclaimer
Results are estimates for planning and analysis based on the figures you enter. They are not accounting, tax, or financial advice — verify with your own records and a qualified professional before making decisions.
Built and maintained by Calculator Matters, an independent calculator project. Method checked against published formulas and primary sources · Last reviewed 5 June 2026 · How we calculate · Found an error? corrections@calculatormatters.com