How the calculation works
Break-even ROAS = 1 ÷ Gross margin as a decimal
Worked example
At a 40% gross margin, break-even ROAS is 1 ÷ 0.40 = 2.50x before other business overhead.
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Estimated break-even ROAS
2.5x
Gross-margin-only planning estimate. Add other variable and fixed costs for a fuller target.
Frequently asked questions
Why does lower margin require higher ROAS?
When less of each revenue dollar remains after product cost, advertising must generate more revenue per dollar spent to cover that spend.
Does this include salaries, software, refunds, and tax?
No. This simplified break-even point uses gross margin only. Add your other variable and fixed costs when setting a real profitability target.
Can I use contribution margin instead?
Yes. For a more conservative target, use the margin remaining after variable costs that rise with each sale.