Free tool

ROAS calculator: when does advertising pay off?

Enter basket value, costs and ad budget. You see your break-even ROAS, your maximum CPA and the profit after ads. No sign-up, nothing is saved.

In short: Break-even ROAS = basket value divided by contribution margin per order. If your ROAS is above it, your ads make money, if it is below, you lose money. Example: basket €60, contribution margin €20 gives a break-even ROAS of 3.

Your store

Purchase price of all products in the basket.

%

Return shipping and handling.

Your advertising

ROAS = revenue from ads divided by ad spend. 3 means: €1 of ads brings €3 of revenue.

Your result

Break-even ROAS
1.99
From this ROAS on, your ads no longer lose money.
Target ROAS for your desired profit
2.38
For €5.00 profit per order.
Contribution margin per order (before ads)€30.20
Maximum ad cost per order (break-even CPA)€30.20
Revenue from ads at ROAS 3.0€9,000
Orders per month150
Ad cost per order (CPA)€20.00
Profit after ads per month€1,530
Profit per order€10.20

Your ROAS is above break-even: 51% headroom before you lose money.

All figures net. Nothing is saved or sent.

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How to calculate ROAS: formula, example and break-even

ROAS (Return on Ad Spend) is the most important metric for paid advertising. But it says nothing about your profit as long as you do not know your margin. That is why every ROAS needs a break-even ROAS: the value from which advertising stops losing money.

The formulas

  • ROAS = revenue from ads ÷ ad spend.
  • Contribution margin per order = (1 − return rate) × (basket − cost of goods) − shipping and fees − return rate × cost per return.
  • Break-even ROAS = basket ÷ contribution margin.
  • Break-even CPA = contribution margin per order.

Example

Basket €60, cost of goods €18, shipping and fees €7, return rate 10% at €6 per return. The contribution margin is about €30, the break-even ROAS about 2. Running at ROAS 3 leaves a buffer. Running at ROAS 1.5 loses money, even if the campaign “brings revenue”.

Common mistakes

  • Calculating with the gross price instead of the net price.
  • Forgetting returns and payment fees.
  • Looking only at the platform’s ROAS without knowing your margin.

The calculator runs entirely in your browser. Your inputs are not saved and not sent anywhere.

Frequently asked questions

What is ROAS?

ROAS stands for Return on Ad Spend. It shows how much revenue you earn per euro of advertising. Formula: ROAS = revenue from ads divided by ad spend. A ROAS of 4 means: €1 of ads brings €4 of revenue.

How do I calculate break-even ROAS?

Break-even ROAS = basket value divided by contribution margin per order. The contribution margin is what is left after cost of goods, shipping, payment fees and returns. Example: basket €60, contribution margin €20 gives a break-even ROAS of 3.

What is a good ROAS?

There is no universal good ROAS. It depends on your margin. A good ROAS is clearly above your break-even ROAS. With a 33% margin the break-even is 3, with a 50% margin it is 2.

What is the difference between ROAS and ROI?

ROAS measures revenue per ad euro, ROI measures profit relative to the investment. A high ROAS can still mean a loss if the margin is small. That is why this calculator works with the contribution margin.

What is CPA?

CPA stands for Cost per Acquisition: the ad cost per order. The break-even CPA is the highest CPA at which you still do not lose money. It equals the contribution margin per order.

Are returns taken into account?

Yes. You enter the return rate and the cost per return. Returned goods count as resellable, the return shipping costs money.