Advertising guide
How Break-Even ROAS Works
Learn why a high ROAS can still lose money when margins are thin.
Revenue alone does not set the target
ROAS divides attributed revenue by advertising spend. Break-even ROAS depends on the share of revenue left before ads. A store keeping 25% of revenue before advertising needs a 4.0x ROAS just to reach zero contribution profit.
Worked example
Suppose a $100 order has $60 product and fulfillment cost and $10 marketplace fees. Gross profit before ads is $30. Spending more than $30 to acquire that order creates a loss, so the break-even ROAS is $100 divided by $30, or 3.33x.
Set a profitable target
Break-even is a floor, not a growth target. Add the profit you want to retain, account for unattributed sales carefully and compare platform reporting with actual contribution profit. Repeat the calculation when prices, fees, conversion rate or product mix change.
Test the numbers
Use your own current costs and keep a dated note for every marketplace fee, carrier rule or operating assumption that may change.