Break-even ROAS calculator for online shops
Break-even ROAS is the ROAS at which an order exactly pays for its advertising. It depends on two things many calculators leave out: the cost of returned orders and the value your Google Ads account actually records.
Calculator.
| Result | Value |
|---|---|
| Contribution margin if the order is kept | 44.00 |
| Result if the order is returned | −23.00 |
| Expected contribution margin per order, before advertising | 27.25 |
| Break-even ROAS, account records net values | 3.67 (367%) |
| Break-even ROAS, account records gross values | 4.37 (437%) |
| Break-even ROAS, account deducts returns | 2.75 (275%) |
The preset figures are a made-up example. If the expected contribution margin is zero or below, no ROAS covers the advertising. Typical gross margins by retail sector from official statistics are in the analysis Break-even ROAS by sector.
How the calculator works.
Break-even ROAS = value in the account per order ÷ expected contribution margin per order, before advertising and after returns.
A kept order brings the net order value minus goods, shipping and payment fee. A returned order costs shipping, payment fee, handling and the loss of value of the goods. Both are weighted by the return rate. In the example: 0.75 × 44 − 0.25 × 23 = 27.25.
Your tracking decides which value goes on top. If the account records net values, it is 100. Gross, 119. If it deducts returns, 75 on average. Place a test order and check what arrives. Applying a figure calculated on net values to an account that records gross values loses money even when the target is met.
The common shortcut “margin times (1 minus return rate)” underestimates the cost of a return and gives 3.03 here instead of 3.67. The full derivation is in the guide Break-even ROAS.
What to do with the number.
| Measured ROAS | Decision |
|---|---|
| Below break-even | Raise target ROAS to at least break-even or cut budget. Exception only with your own new-customer calculation and a fixed loss cap. |
| Between break-even and target | Do not scale. The advertising pays for itself, but not for your fixed costs and profit. |
| Above target | Test more budget or a looser target step by step, then measure again. |
Break-even is the floor, not the goal: at that point the entire contribution margin goes to advertising. How to turn it into a target ROAS is covered in How to set target ROAS. If margins differ a lot between your products, one break-even figure is not enough. How I split accounts then is on Google Ads by contribution margin.
Frequently asked questions.
What is a good break-even ROAS?
There is no generally good value. The lower it is, the more room advertising has. It falls with higher margin, larger orders and fewer returns. With small orders it rises steeply because shipping and handling stay fixed.
Does VAT belong in the calculation?
Never in the contribution margin, which is always net. Only if your account records gross values is break-even multiplied by the tax factor. That is what the VAT field is for.
Which return rate should I use?
The share of value that comes back, measured on orders whose return period has ended. Recent orders understate the rate because returns are still on their way.
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