Break-even ROAS calculator

Return on ad spend (ROAS) is revenue divided by ad cost, so a ROAS of 3 means three euros of sales for every euro of ads. That sounds healthy until you subtract the cost of what you sold. Your break-even ROAS is the point where the ads have paid for themselves and not a cent more, and it depends on one number: your gross margin.

How the calculator works

1. Enter your gross profit margin as a percentage: what is left of each sale after the cost of the product or service itself, before ad spend.
2. Break-even ROAS is 100 divided by that margin. A 30% margin needs a ROAS of 3.33: for every euro of ads you must sell 3.33 euros to cover the ad cost with the profit those sales carry.
3. Anything above that figure is real profit after ads. Anything below it loses money on every sale, even while revenue looks fine.

How to use the result

• Set your target ROAS in Google Ads above break-even, never at it. A target of break-even times 1.3 leaves room for returns, discounts and the sales the tracking misses.
• Different products have different margins. If one campaign sells low-margin items, give it its own, higher target.
• Compare the break-even figure with the ROAS column in Google Ads at campaign level, not for the whole account.

Questions we get asked

Should I use gross or net margin?

Gross margin, before advertising costs. Using net margin would count the ad spend twice.

My ROAS is above break-even but I am not making money. Why?

Usually because conversion tracking is counting sales that did not happen, or counting them twice, so the reported ROAS is inflated. Check the tracking before trusting the number.

Does this work for lead generation?

Use the allowable cost per enquiry calculator instead: it starts from what a customer is worth rather than from revenue per sale.

Want this checked for you every day? See the 17 checks Ads Toolbox runs on a connected Google Ads account.