Break-even ROAS calculator
Break-even ROAS is one divided by gross margin. A 35% margin needs 2.86×; a 20% margin needs 5×; a 70% margin needs only 1.43×. Below the break-even figure, every extra pound of ad spend loses money.
How to find break-even ROAS
Setting an automated bidding target at exactly break-even guarantees zero profit at best, because the platform will optimise toward that number and land around it. The target needs headroom for the costs the margin figure does not include: returns, payment fees, customer service and the share of overhead the sale should carry. A common practical rule is to set the target at break-even plus a third, then move it as actual profitability becomes clear.
Questions
Divide one by your gross margin. A 25% margin gives a break-even of 4×.
No; above it. Break-even ignores returns, payment fees and overheads, so a target at exactly break-even loses money in practice.
Gross margin after cost of goods and fulfilment. Using a headline margin that ignores shipping is the usual error.
Because more of each sale survives to cover the ad. At a 70% margin, 1.43× is enough to stand still.
Not directly: it depends on margin percentage. But if margin percentage varies by order size, so does the break-even point.