Work out the ROAS you need to break even
Enter your gross margin, average order value and the profit you want, and get break-even ROAS, target ROAS and the most you can pay per order. Runs in your browser; nothing is sent.
Free, no sign-up. The numbers are only as good as the margin you enter.
Best, expected and worst case
example spreadMargin moves five points either way; the worst case also refunds five more orders in every hundred. ROAS as your platform shows it.
The maths, with your numbers
Core formulas: break-even ROAS = 1 ÷ margin. Target ROAS = 1 ÷ (margin − target profit). Maximum cost per order = order value × (margin − target profit). All on revenue excl. VAT.
- Net order value
order value, already excl. VAT= €60.00 - Break-even ROAS
1 ÷ (margin × (1 − refunds))1 ÷ (0.40 × 1.00) = 2.50× - Target ROAS
1 ÷ ((margin − target profit) × (1 − refunds))1 ÷ ((0.40 − 0.10) × 1.00) = 3.33× - Maximum cost per order
net order value × (1 − refunds) × (margin − target profit)€60.00 × 1.00 × (0.40 − 0.10) = €18.00 - Break-even cost per order
net order value × (1 − refunds) × margin€60.00 × 1.00 × 0.40 = €24.00
VAT-inclusive or exclusive: which ROAS are you reading?
The same order gives two different ROAS figures, depending on whether your tracking sends the price with or without VAT. Neither is wrong; mixing them is.
VAT is not your money. You collect it for the tax office, so it never pays for ads or stock. If your shop sends order values including VAT, the platform's ROAS reads higher than the money you keep, by exactly 1 + the VAT rate: 25.5 % VAT makes every ROAS 1.255 times larger.
- 01Values excl. VAT: use the calculator's numbers as they are. This is the cleaner set-up, and it lets you compare countries with different VAT rates.
- 02Values incl. VAT: multiply the targets by 1 + VAT before you enter them. Pick "incl. VAT" above and the calculator does it for you.
- 03Cost per order does not change. It comes from your net order value, and ad spend is treated without VAT, because a VAT-registered business normally reclaims it or accounts for it under the reverse charge. Confirm with your accountant.
- 04Keep every platform on one basis. Gross values in Google Ads and net values in Meta make the two ROAS figures impossible to compare. Tracking set-up fixes this at the source.
Same profit, same order. If your break-even is 2.5× on net values, the platform has to show 3.14× when it sees gross values.
Your account needs 2.50× to break even and 3.33× to hit your target. Get an ads review that starts from these numbers.
Get a free ads reviewA worked example, step by step
A made-up shop selling wool socks from Tampere. Every figure here is fictional; the method is the one the calculator uses.
- Break-even ROAS on net values
1 ÷ 0.40 = 2.50× - Target ROAS on net values, keeping 10 %
1 ÷ (0.40 − 0.10) = 3.33× - Her shop sends values incl. VAT, so in the ad platform
2.50 × 1.255 = 3.14× break-even, 3.33 × 1.255 = 4.18× targetGoogle Ads target ROAS field: 418 % - Maximum cost per order
€50.00 × (0.40 − 0.10) = €15.00
What to do with this number
- 1
Fix the conversion value first
One basis, net or gross, the same on every platform, with refunds fed back where you can. Without it the target is a guess. GA4, GTM and server-side tracking
- 2
Set the target in Shopping and Performance Max
Enter target ROAS as a percentage, and split products by margin so a 25 % item and a 60 % item do not share one target. Google Shopping and Performance Max
- 3
Judge Meta campaigns on the same yardstick
Compare reported purchase ROAS with your break-even, remembering that view-through credit inflates it. Cut what stays below. Meta Ads management
Questions about break-even ROAS
What is break-even ROAS?
Break-even ROAS is the return on ad spend at which an order's margin exactly pays for the ads that brought it in, leaving zero profit. It equals 1 divided by your gross margin: at a 40 % margin you need €2.50 of revenue, excluding VAT, for every euro of ad spend. Below it, each sale loses money.
Should I use revenue or profit?
Use revenue in the ad platform and set the target from profit. Platforms optimise to the conversion value you send, usually order revenue, so ROAS is a revenue ratio. Your margin turns it into profit: target ROAS is 1 divided by margin minus target profit share. Sending profit as the value works, but needs careful tracking.
How do refunds change the number?
Refunds raise the ROAS you need, because the platform counted revenue you later paid back. If 10 % of tracked revenue is refunded, divide by 0.9: a break-even ROAS of 2.50 becomes about 2.78. The refund slider above does this, assuming returned goods go back into stock. Return postage and damaged stock push it higher.
Get a free ads review
Send your target from the calculator and the account you run. Within one working day you get a plain-language view of where spend sits above and below it.
Your result: Order value €60.00 (excl. VAT), margin 40 %, profit target 10 %, refunds 0 %. Break-even ROAS 2.50×, target ROAS 3.33× (333 %), max cost per order €18.00.
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