Short answer: Break-even ROAS = net revenue per order ÷ contribution margin before marketing. Enter your own numbers below to see the ROAS your ads need to break even, and the ROAS you need to hit your profit target.
Calculate your break-even ROAS
The calculator starts with an example fashion brand. Replace each number with your own.
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How to use the calculator
- Average order value: use revenue per order excluding GST
- Average discount: the typical discount per order, including coupon codes
- Product cost: what the products in an average order cost you to make or buy
- Shipping and packaging: your average fulfilment cost per order
- Payment fees: your payment gateway percentage
- Returns and RTO allowance: your average cost of returns and failed deliveries, spread across all orders
- Target profit: how much profit you want from each order after ad costs
How to read the results
Break-even ROAS
The minimum return on ad spend where an order makes zero profit. If your campaigns run below this, you lose money on every first order.
Target ROAS
The ROAS you need to make your target profit on each order. Use it as the benchmark for judging and scaling campaigns.
Break-even ad cost per order
The most you can spend on ads to win one order and still break even. Compare it with your actual cost per purchase.
Match your ad platform’s numbers. This calculator uses revenue excluding GST. If your Meta purchase value includes GST and shipping, divide that higher value by your contribution margin instead. Otherwise you’ll think campaigns are more profitable than they are.
What to do if your ROAS is below break-even
- Raise average order value with bundles and free shipping thresholds
- Improve conversion rate so the same spend brings more orders. See why D2C websites don’t convert
- Cut RTO and returns. See reducing COD returns and RTO
- Refresh creative and add retargeting to lower cost per purchase
- Count repeat purchases: strong retention can justify a lower first-order ROAS
For a full walkthrough of the maths, read D2C unit economics and break-even ROAS: a worked example.
Frequently asked questions
What is break-even ROAS?
It’s the return on ad spend at which the revenue from an order exactly covers product, fulfilment, returns and ad costs, leaving zero profit.
How do I calculate break-even ROAS?
Divide your net revenue per order by your contribution margin before marketing. For example, ₹2,200 ÷ ₹1,116 = 1.97.
Is a higher ROAS always better?
Not always. A very high ROAS can mean you’re under-spending and missing profitable growth. The goal is the highest profit, not the highest ROAS.
Should I include repeat purchases?
For first-order decisions, no. For long-term budget decisions, include realistic repeat purchase data, as long as you have the cash to wait for it.
Want your real numbers worked out? Our D2C profitability team can calculate them from your store and ad data.