The ROAS you must hit just to cover product cost and ad spend — from your margin, or from price and cost.
Your break-even ROAS is the return on ad spend at which revenue exactly covers your cost of goods plus your ad spend — you make zero profit. At this ROAS you neither gain nor lose; above it you profit, and below it you lose money. The lower your gross margin, the more revenue each ad dollar must return, so the higher your break-even ROAS climbs.
Your gross margin is 40%, or 0.40 as a decimal. Break-even ROAS = 1 ÷ 0.40 = 2.5×, which is 250%. That means you need $2.50 of revenue for every $1 of ad spend just to break even. Land below 2.5× and the campaign is losing money; clear it and every extra dollar of revenue starts contributing to overhead and profit.
There is no single "good" number — a lower break-even ROAS is always better because it means your margins do more of the work. What matters is the gap between break-even and your target ROAS. Your target should sit comfortably above break-even to leave room for overhead, returns, and actual profit; hitting exactly break-even means you worked for free. Thin-margin businesses carry a high break-even ROAS and have little slack, so they need efficient campaigns and tight targeting. Use the ROAS calculator to see where a live campaign sits against this line, and the ad budget planner to size spend against a revenue goal.
What is break-even ROAS? The ROAS at which revenue exactly covers COGS and ad spend, leaving zero profit. It equals 1 ÷ gross margin.
How do I lower my break-even ROAS? Raise your gross margin — push price up or bring cost of goods down. A fatter margin needs fewer revenue dollars per ad dollar, so break-even falls.
What ROAS should I target? Above break-even, with headroom for overhead and profit. Break-even only covers product cost and ad spend; everything else has to come from the margin above it.
