Break-Even Advertising Calculator

How the calculator works

Free break-even ROAS calculator: the return on ad spend each sale needs to cover its product cost, other costs and selling fees. Prices excluding VAT.

Contribution before advertising is the selling price minus the product cost, your other per-unit costs and the selling fees charged as a percentage of that price. Break-even ROAS is the selling price divided by that contribution: the sales each unit of ad spend has to bring in for advertising to cost exactly what a sale contributes.

Worked example

A product sells for EUR 100, excluding VAT. It costs EUR 60 per unit, plus EUR 10 of other costs per unit for shipping and packaging. Marketplace and payment fees add up to 10% of the price.

• Selling fees at EUR 100: EUR 10.00
• Contribution per unit before advertising: EUR 20.00
• Break-even ROAS: EUR 100 / EUR 20.00 = 5.00x

Each EUR 1 of advertising has to bring in at least EUR 5 of sales. At a ROAS of 4x the ads cost more than the sales they bring in contribute; at 6x part of the contribution is left after advertising. The figures are illustrative. Use your own costs and fees.

When there is no finite break-even ROAS

If the selling price does not cover the product cost, the other costs and the fees, each sale leaves nothing or a loss before any advertising. No return on ad spend can then make advertising pay for itself, and the calculator says so instead of showing a number. Fix the price, costs or fees first: see how to calculate your true profit margin before selling.

What the result does not include

Break-even ROAS is a variable-cost break-even. It does not include fixed costs such as rent, salaries, software or financing, returns, or any cost you leave out, and it is not a target: a profitable campaign needs a ROAS above it. The calculator does not choose a budget, a platform or a bid. For marketplace sellers, see what goes into an Amazon FBA profit margin or a Shopify profit margin.

When you need more than a break-even

Real decisions need the price that reaches your target, the landed cost of your stock, returns and costs that change before you sell. That is what the MarginGuides Decision Engine is for: Analyze and the decision tools.

More free calculators

• Free Profit Margin Calculator: how much each sale really contributes after its costs and selling fees.
• Free Landed Cost Calculator: what each unit really costs once a shipment has arrived.

All of them are in the Free Calculators collection, and one free account works for every one.

Frequently asked questions

What is break-even ROAS?

ROAS, return on ad spend, is the sales revenue an ad brings in for each unit of currency spent on it: EUR 500 of sales from EUR 100 of ads is a ROAS of 5x. Your break-even ROAS is the lowest ROAS at which advertising pays for itself: below it, every sale the ads bring in loses money once the ad cost is counted.

How is break-even ROAS calculated?

First the contribution before advertising: the selling price minus the product cost, the other per-unit costs and the selling fees charged on that price. The break-even ROAS is the selling price divided by that contribution. A EUR 100 product that leaves EUR 20 before advertising has a break-even ROAS of 100 / 20 = 5.00x.

Should I include advertising in the other costs?

No. Enter every per-unit cost except advertising - shipping, fulfilment, packaging and similar. Advertising is what the result measures: the break-even ROAS shows how much of it each sale can carry.

Is break-even ROAS the same as profitability?

No. It is a variable-cost break-even: at exactly that ROAS, advertising uses up everything a sale contributes, and nothing is left for fixed costs such as rent, salaries or software, or for profit. A ROAS above it leaves part of the contribution after advertising; a ROAS below it means each ad-driven sale loses money.

What is the link between break-even ROAS and ACoS?

They describe the same threshold from opposite sides. ACoS, advertising cost of sales, is ad spend as a percentage of the sales it brings in - one divided by ROAS. A break-even ROAS of 5.00x is the same as a break-even ACoS of 20%.

Should I enter prices with or without VAT or sales tax?

Without. Measure advertising against net, tax-exclusive amounts: VAT, GST or sales tax collected from customers passes through to the tax authority. If an indirect tax is genuinely not recoverable for your business, include its amount in the product cost or other costs per unit.

Why do I need an account to see the result?

The calculator is free, and so is the account. One free MarginGuides account works for every MarginGuides Free Calculator, with no limit on how often you calculate. Creating an account is free and does not start a paid subscription.