Break-even ROAS. The number where ads stop losing money.

A ROAS of 3 sounds healthy, but whether it makes money depends on your margin. With a 25% margin, ROAS 3 loses money on every order; with a 60% margin, it’s comfortably profitable. The platform reports revenue, not profit, so it can’t tell you which one you’re in.

Break-even ROAS is the line between the two. Below it, every sale the ads bring costs more than it earns. Above it, the difference is your contribution: what’s left to pay for overheads and profit.

Profit per order before ads is the order value minus the product cost and any other cost that grows with each order: shipping, payment fees, packaging, an allowance for returns. If you enter a margin, product cost is the order value × (1 − margin).

Break-even ROAS is the order value divided by that profit, which is the same as 1 ÷ contribution margin. Break-even CPA is the profit itself: the most you can pay in ads for one order without losing money on it.

The calculation looks at one order. It leaves out fixed costs (rent, salaries, tools), repeat purchases and lifetime value. If customers reliably come back, you may accept a lower ROAS on the first order; if returns are high, raise the returns allowance.

It also takes the platform’s ROAS at face value. Platforms can credit themselves with sales that would have happened anyway, so compare their figure with the orders you can trace to ads before deciding the target.

Set your target ROAS or target CPA in bidding above break-even, with enough room for your fixed costs and profit. Then review campaigns against contribution, not against ROAS alone: a campaign at ROAS 5 on low-margin products can earn less than one at ROAS 3 on high-margin ones.