Paritian

Work & Productivity

Break-Even ROAS Calculator (Maximum Ad Cost per Order)

The return on ad spend you need just to break even on an order, the most you can pay to win one, and the ROAS and cost per order that leave a target profit.

Results

Break-even ROAS (revenue per unit of ad spend) 2.50
Contribution margin per order 40.0 %
Highest cost per order that still breaks even 32.00
ROAS needed to keep the target profit 3.33
Highest cost per order that keeps the target profit 24.00

What this tool does

Revenue is not profit: if an order brings 80 and costs 48 to fulfil, only 32 is left to pay for the ad that found the customer. Break-even ROAS is the order value divided by that contribution — equal to one over the contribution margin — so a 40 % margin needs a ROAS of 2.5 before a single unit of profit. Count every variable cost: product, packaging, shipping, payment fees, returns. Fixed costs are left out, and the first order may be only the start of a customer relationship, so a ROAS below break-even is not always a loss in the long run.

Formula

break-even ROAS = order value ÷ (order value − variable cost) · max CPA = order value − variable cost

Variables

SymbolMeaningUnit
aovAverage order value—
vcVariable cost per order (product, shipping, fees, returns)—
tpProfit you want to keep, as a share of revenue%
BRBreak-even ROAS (revenue per unit of ad spend)—
CMContribution margin per order%
MCHighest cost per order that still breaks even—
TRROAS needed to keep the target profit—
TCHighest cost per order that keeps the target profit—

Worked example

  • Average order value80
  • Variable cost per order (product, shipping, fees, returns)48
  • Profit you want to keep, as a share of revenue10 %
  • Break-even ROAS (revenue per unit of ad spend)2.50
  • Contribution margin per order40.0 %
  • Highest cost per order that still breaks even32.00
  • ROAS needed to keep the target profit3.33
  • Highest cost per order that keeps the target profit24.00

Limitations

  • The tool works with whatever currency you use for the inputs; it does not convert between currencies.
  • The result is an estimate based only on the values you type. Real situations often include factors this calculator does not know about.