break-even roas calculator.
minimum roas to cover cogs + fees
- total cost % of revenue
- 46.00%
- contribution margin
- 54.00%
- break-even roas (covers cogs + fees)
- 1.85×
- target roas for 20% margin
- 2.94×
> worked example
Your product has 35% COGS, a 3% payment processing fee, and 8% shipping, total variable cost of 46% of revenue. The contribution margin is 54%, putting your break-even ROAS at 1.85×. You're targeting a 20% profit margin, which means ad spend can take at most 34% of revenue, pushing your required ROAS to 2.94×. Any campaign returning less than 1.85× is losing money on goods before a single fixed cost is counted.
takeaway, Break-even ROAS is set by your cost structure, not your ambition, calculate it before touching tROAS targets.
> when operators reach for this
- DTC founders setting a floor tROAS before launching a new Meta campaign so they don't scale a money-losing funnel.
- Media buyers presenting tROAS recommendations to a client who asks 'why not just set it to 4×' without knowing their margin.
- Ecommerce operators auditing ad accounts after a promo period where higher discounts quietly eroded the contribution margin.
- Finance leads verifying that a planned ad spend increase still clears the break-even line before approving the budget.
- Agencies onboarding a new brand who need to reverse-engineer the correct ROAS floor from a P&L they were just handed.
> the calculation
- total variable cost %
cogs % + transaction fee % + shipping %All costs expressed as a percentage of revenue. - contribution margin
1 − total variable cost %The slice of each revenue dollar left to cover ads and fixed costs. - break-even roas
1 ÷ contribution margin46% total cost ⇒ 54% margin ⇒ 1.85× break-even ROAS. - target roas for desired margin
1 ÷ (contribution margin − target margin %)20% desired profit margin with 54% contribution margin ⇒ 2.94× target ROAS.