Your ads report says 3×. You add budget. The month closes, you look at the bank, and there is less in it than you expected.
Nothing is broken. The 3× was never compared with the number it has to beat.
Break-even ROAS is the lowest return on ad spend at which your ads stop losing money. It is your sales per order divided by what is left of that order after the costs that come with every sale.
Break-even ROAS = sales per order ÷ what’s left after variable costs
One order, followed from the till
Say you sell clothing and your average order is £90 including VAT. That is £75 before VAT. Here is where it goes:
Every £1 on ads has to bring in £2.35 of sales just to break even.
Only costs that rise with every sale go in: product, shipping and packing, payment fees, returns. Staff, rent and software stay out, because one more order does not change them.
£31.95 is 42.6% of £75, and 1 ÷ 0.426 = 2.35.
Now try your own. Move the sliders:
Try it with your numbers
Your break-even ROAS
Where each order goes
- Product
- Shipping
- Fees
- Returns
- Left for marketing
Left for marketing: £ an order
Aim for a target ROAS of ×, 20 to 30% above the floor.
Add your fixed costs (monthly view)
Staff, rent and software don't rise with each sale, so they stay out of the floor. To see the MER you need to cover them too in a month, add them here.
To cover fixed costs as well, this month needs an MER of ×.
From break-even to target
Break-even means you make nothing. Aim 20 to 30% above it, so a bad week or a dearer month on Meta does not push you under. With a break-even of 2.35, the target is 2.8 to 3.1. A break-even of 3.0 gives a target of 3.6 to 3.9.
Your report said 3×. Against 2.35, that is 28% above break-even. Inside the target, but without much room.
You have your floor. Now see how much a new channel needs to spend to clear it.
Check it against real sales
Compare your break-even with your real sales from Shopify. Each platform’s own ROAS runs high, because Meta and Google can both count the same sale. If a platform reports sales including VAT, work your break-even out on the same basis.
Once a month, ask 3 things:
- Is your blended ROAS above break-even? If not, fix that first.
- Is it above your target? If not, you cover costs but do not make the profit you need.
- Which channels sit under break-even? Look at those before you add budget.
Fixed costs still need paying. Check them monthly: did this month’s sales cover the ads and the staff, rent and software? The calculator’s monthly view shows the MER that takes.
Related reading
- What is a good ROAS?: turn your break-even into a target
- What is MER?: the same floor, for all your marketing at once
- Easier Ads Budgeting: how much a new channel needs to spend for a fair test
A break-even that's slightly off costs more in peak week. Let's get yours exactly right, free.
Not sure where your break-even sits? Book a free call and we’ll work it out with you.
Quick answers
What is break-even ROAS?
Break-even ROAS is the return on ad spend at which the sales your ads bring in exactly cover the ads and the costs that come with each sale. Above it, the ads make money. Below it, every sale they bring in loses money.
How do I calculate break-even ROAS?
Take your sales per order, before VAT. Take off the costs that rise with every sale: product, shipping and packing, payment fees and returns. Divide your sales per order by what's left. If an order is £75 and £31.95 is left, your break-even ROAS is 2.35.
Should staff, rent and software go into break-even ROAS?
No. Those costs stay the same whether you sell 100 orders or 1,000, so they don't belong in a per-sale number. Check them separately, as a monthly view of whether total sales covered the ads and the fixed costs.
Is break-even ROAS the same as target ROAS?
No. Break-even is the floor, where you make nothing. Your target should sit 20 to 30% above it, so a break-even of 2.35 means a target of about 2.8 to 3.1.
