Break-even ROAS and CPA calculator

How it works

contribution per order =
  order value × gross margin
    × (1 - return rate)
  - order value × fees
  - shipping and fulfilment

break-even CPA = contribution per order
break-even ROAS =
  order value ÷ break-even CPA

target CPA = contribution per order
  - target profit × order value
target ROAS = order value ÷ target CPA

profit per order at a ROAS =
  contribution per order
  - order value ÷ ROAS

What each term means

Order value

The average order value before refunds, without VAT or sales tax. It is the revenue a ROAS divides by, so refunds are handled in the contribution, not by shrinking the order value.

Gross margin

Order value minus the cost of the goods, as a share of order value.

Return rate

The share of orders refunded. The calculator assumes a refunded order's goods go back into stock, so the order earns no margin but still pays its shipping and its payment fee. If returned goods cannot be sold again, or you pay the return postage, your real break-even is higher than shown.

Fees

Payment and platform fees as a share of order value, charged on every order, including orders later refunded.

Shipping and fulfilment

What the store pays per order to pick, pack and ship it.

Target profit

The profit you want left per order after ad spend, as a share of order value.

CPA

Cost per acquisition: here, the ad spend per order.

ROAS

Return on ad spend: order value divided by the ad spend per order.

What it leaves out: fixed costs such as salaries, rent and software. Break-even here means your ads pay for themselves order by order; the fixed costs come out of what is left.

Break-even ROAS is your break-even MER

Break-even ROAS on total revenue against total ad spend is the break-even MER, the marketing efficiency ratio: total revenue divided by total ad spend. If your MER is below it, your orders do not cover your ads. Measure it on the same revenue you entered here: before refunds, without VAT.

A caution on platform ROAS

The ROAS a platform reports usually counts conversions that another channel also counts. Compare the break-even number with your MER, not with one platform's own ROAS. Knowing what each channel actually caused takes a measurement that splits the credit, such as incrementality testing or a causal read of your GA4 export.

Worked example

Example inputs in round numbers, not a real store:

Average order value

€100

Gross margin

60%

Shipping and fulfilment

€10 per order

Payment and platform fees

4%

Return or refund rate

10%

Target profit after ads

15%

1. 1Margin after refunds: €100 × 60% × (1 - 10%) = €54.00
2. 2Fees: €100 × 4% = €4.00
3. 3Contribution per order: €54.00 - €4.00 - €10.00 = €40.00
4. 4Break-even CPA: €40.00
5. 5Break-even ROAS: €100 ÷ €40.00 = 2.50x
6. 6Target profit per order: 15% × €100 = €15.00
7. 7Target CPA: €40.00 - €15.00 = €25.00
8. 8Target ROAS: €100 ÷ €25.00 = 4.00x
9. 9Profit per order at 2.00x: €40.00 - €100 ÷ 2.00 = €40.00 - €50.00 = -€10.00

So this example store needs a MER of at least 2.50x to cover its ads, and 4.00x to keep 15% of order value as profit. Without returns it would break even at €100 ÷ €46.00 = 2.17x: the 10% refund rate adds 0.33x to the ROAS it needs.

Frequently asked questions

• What is a good ROAS for an ecommerce store?

  One above your break-even ROAS. There is no single good number, because break-even ROAS is order value divided by what each order leaves after cost of goods, shipping, fees and refunds, so it moves with your margin and costs. The same ROAS can be a profit for one store and a loss for another. Work out your own line first, then aim for the target ROAS your profit goal needs.
• How do I calculate break-even ROAS?

  Divide your average order value by the contribution per order: what an order leaves after cost of goods, shipping, payment fees and refunds. With no shipping, fees or refunds, that is 1 divided by your gross margin, so a 50% margin breaks even at 2x and a 25% margin at 4x. Every cost you add lowers the contribution and raises the ROAS you need.
• Should I compare my break-even ROAS with the ROAS in my ad platforms?

  With care. The ROAS a platform reports usually counts conversions that another channel also counts, so adding up every platform's conversions can give more sales than the store took. Compare the break-even number with your MER, total revenue divided by total ad spend, which counts each order once. Knowing what each channel actually caused takes a measurement that splits the credit, such as incrementality testing or a causal read of your GA4 export.
• Is break-even ROAS the same as break-even MER?

  Yes, when you apply it to totals. MER is total revenue divided by total ad spend. If orders leave the contribution you entered on average, the store covers its ad spend exactly when its MER reaches the break-even ROAS this calculator gives. Measure MER on the same revenue you entered here: before refunds, without VAT or sales tax.
• Why do returns raise the break-even ROAS?

  Because ROAS is usually counted on the order as placed, before any refund. A refunded order brings no margin but still costs its shipping and payment fee, so each order leaves less on average. The order value a ROAS divides stays the same, so a smaller contribution means a higher break-even ROAS.
• Is break-even CPA the same as customer acquisition cost?

  Not quite. Break-even CPA here is ad spend per order, for one order, new customer or returning. Customer acquisition cost (CAC) is usually the whole cost of winning a new customer. If new customers come back and buy again, you may choose to pay more than the break-even CPA for a first order, but that is a bet on repeat orders. This calculator covers one order at a time.

Related terms: ROAS, CPA, average order value, customer acquisition cost and incrementality testing.