How do you calculate Break-even ROAS?

Break-even ROAS = 1 ÷ contribution margin (as a fraction of revenue). For example: A ₹1,500 order with ₹900 of variable costs has a 40% contribution margin, so break-even ROAS is 2.5×.

What Is Break-even ROAS? Definition, Formula and Example

What is Break-even ROAS?

Break-even ROAS is the lowest ROAS at which an ad campaign doesn't lose money on the sale. It equals 1 divided by your contribution margin as a share of revenue.

FormulaBreak-even ROAS = 1 ÷ contribution margin (as a fraction of revenue)

If each order keeps 40% of its revenue after product cost, shipping, payment fees, packaging and returns, break-even ROAS is 1 ÷ 0.40 = 2.5×. Below 2.5×, every first order loses money.

Brands with strong repeat purchase sometimes run below break-even on the first order and earn it back over the customer's lifetime. That should be a deliberate decision with a payback target, not a default.

Example

A ₹1,500 order with ₹900 of variable costs has a 40% contribution margin, so break-even ROAS is 2.5×.

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