How to Calculate Break-Even ROAS to Maximize Profits in 2025

Meta: Learn how to calculate breakeven ROAS in 2025. See the exact formula, real-world examples, and how to use your number to guide your strategic ad decisions.

Knowing how to calculate break-even ROAS helps you figure out the line between covering ad costs and actually turning a profit. It’s not just a number, it’s a benchmark that can guide your decisions around budgeting, creative, and campaign goals.

In this guide, we’ll break down how to calculate break-even ROAS, why it matters, and how to use it to build a stronger ad strategy.

In this article, we’ll cover: 

• What break-even ROAS means and why it matters
• The formula to calculate it (with examples)
• How to use it to guide your ad strategy
• Why creative performance can make or break ROAS

Let’s start by discussing what break-even ROAS is.

What is break-even ROAS?

Break-even return on ad spend (ROAS) is the point where your ad revenue equals your ad spend. You’re not earning profit yet, but you’re not losing money either — you’re just covering your costs. For example, if your break-even ROAS is 2.5, that means you need to generate $2.50 for every $1 spent on ads to break even.

It’s easy to confuse this with profitable ROAS, but there’s a clear difference. Break-even ROAS tells you the minimum you need to stay afloat. Profitable ROAS is anything higher, and that’s where real returns start to show. If your break-even number is 2.5 and your ads are hitting 3.2, you’re in the green. If they’re at 2.2, it’s time to make some changes.

Knowing how to calculate break-even ROAS gives you a clear benchmark. Here’s why knowing how to calculate break-even ROAS matters:

• Set goals: You’ll know the baseline your campaigns need to hit
  
  
• Spot issues: If ROAS dips below break-even, you’ll know it’s time to fix something
  
  
• Make informed calls: You can evaluate creative, spend, and overall strategy faster

What is a good break-even ROAS?

There’s no universal number. A “good” break-even ROAS depends entirely on your margins. If your product has high profit margins, your break-even number will be lower. If your margins are tight, you’ll need a higher ROAS just to break even.

So instead, it’s a good idea to figure out what your break-even ROAS is based on your margins. Once you know that, you’ll have a clear baseline for evaluating whether a campaign is working or needs fixing.

We determined these ranges from applying the standard ROAS calculation formula (1 ÷ gross margin) to common profit margin benchmarks across ecommerce, retail, and digital product categories, based on publicly available data from platforms like Meta Ads Manager, Shopify, and Triple Whale.

Here’s a general idea of how it can vary:

• High-margin products (e.g., digital goods): Break-even ROAS might be around 1.0 to 2.5
  
  
• Average-margin products (e.g., mid-priced ecommerce): Around 2.0 to 5.0
  
  
• Low-margin products (e.g., fast-moving consumer goods): Often 5.0 to 33.0

The main takeaway is not to rely on averages. Your break-even ROAS should be calculated using your actual numbers, not what another brand is doing.

Can ROAS be negative?

Technically, no. ROAS itself is a ratio, not a dollar amount, so you won’t see a negative number. But your results can feel negative if your return is lower than your spend.

For example, if you spend $1,000 and only make $300 in revenue, your ROAS is 0.3. It’s not written as “-0.7,” but it clearly means you're losing money.

So, while ROAS won’t go into negative numbers, it can absolutely reflect negative performance. If you’re below your break-even ROAS, that’s your red flag to take action, whether that’s adjusting your targeting, refreshing creative, or reviewing your margins.

How to calculate ROAS: the standard method

Before you can understand break-even ROAS, you need to know how regular ROAS works. Luckily, it’s pretty simple:

ROAS = Revenue from Ads ÷ Ad Spend

So if you spent $500 on a campaign and earned $1,500 in revenue, your ROAS is:

$1,500 ÷ $500 = 3.0

This means you made $3 for every $1 you spent on ads.

Break-even ROAS formula (with examples) 

If you want to find your break-even point quickly, there’s a simple ROAS calculation formula that gets the job done:

Break-even ROAS = 1 ÷ Gross Margin %

Your gross margin is the percentage of revenue you keep after subtracting product costs (and shipping, if you’re covering that too). You can calculate it like this:

Gross Margin % = (Revenue – Cost of Goods Sold) ÷ Revenue

Let’s take a look at some examples.

If you sell a product for $100, and it costs you $40 to make and ship. Let’s calculate:

• Revenue = $100
  
  
• Cost of goods = $40
  
  
• Gross margin = ($100 – $40) ÷ $100 = 0.60 or 60%
  
  
• Break-even ROAS = 1 ÷ 0.60 = 1.67

So, for every $1 you spend on ads, you need to earn $1.67 just to break even.

Or let’s say you’re running paid ads to a $49/month subscription. On average, customers stick around for 5 months, so the lifetime value is $245. Let’s say your service costs you $95 to deliver over those 5 months. Let’s calculate:

• Revenue = $245
  
  
• Cost = $95
  
  
• Gross margin = ($245 – $95) ÷ $245 = 0.61 or 61%
  
  
• Break-even ROAS = 1 ÷ 0.61 = 1.64

In this scenario, your ads need to generate at least $1.64 in revenue for every $1 spent to break even.

Why most break-even ROAS calculators miss the big picture

Plugging your margin into a calculator is a good start, but it won’t tell you everything. Most break-even ROAS calculators are doing the math, but they’re not showing you why your ROAS is high or low, or what to do about it.

Here’s what they usually miss:

• Creative performance: If your ads aren't catching attention, you're wasting budget before you even get a click. Weak creatives drive up customer acquisition cost (CAC), which lowers ROAS, even if your margins look fine on paper.
  
  
• Attribution delays: Platforms like Meta or Google might not credit conversions right away. If you’re measuring ROAS too soon, it might look worse than it really is. Want a smarter approach to Google Ads attribution and ROI? Try this Google ad strategy breakdown.
  
  
• Post-purchase revenue: For subscription businesses or brands with strong repeat customers, focusing only on the first sale can skew your numbers. Your true return might come later, and that’s not captured in a basic calculator.

For deeper insights into your competitors’ messaging and performance, check out this digital ad intelligence guide.

How does creative impact your ROAS (and break-even point)?

Creative plays a bigger role in your ROAS than many people realize. When your ads are engaging, they catch attention quickly, drive more clicks, and help convert viewers into customers, all of which improves your return. On the other hand, if your creative is weak or unclear, you can burn through your budget before you even get a chance to make a sale.

Use tools like Bestever’s creative analytics to pinpoint exactly what’s working — and what’s dragging performance down. With Bestever, you can:

• Score creatives: See how each asset performs in terms of clarity, hook strength, CTA, and fatigue
  
  
• Spot underperformers: Identify which ads are losing steam before your costs go up
  
  
• Fix or replace creative: Use insights to tweak or swap creatives before they hurt performance

What happens if you’re below break-even ROAS?

If your ROAS is below breakeven, your ads are losing money. You're spending more to get customers than those customers are bringing in, and the longer it goes unchecked, the more expensive it gets.

When that happens, it’s time to pause and take a closer look at a few key areas. Here’s what to do next:

• Pause and review your campaigns: Double-check your targeting, platform, and offer. Make sure you’re reaching the right audience with the right message.
  
  
• Verify your margins: Make sure your product costs, shipping, and fulfillment numbers are accurate. Even small changes can affect your break-even ROAS.
  
  
• Audit your creative: Use Bestever to identify which ads are underperforming. If something’s dragging down your ROAS, it’s often a creative issue.
  
  
• Test new offers or pricing: If the product and creative look solid, consider testing your bundle, discount, or landing page to see if small changes boost conversions.

If you're using Meta campaigns and want to streamline testing, this Facebook Ad automation tool can help you iterate faster and find winning variants.

Frequently asked questions

What’s the difference between ROAS and ROI?

ROAS looks at ad revenue vs. ad spend. Return on investment (ROI) goes deeper and includes all your costs, like product, team, and software. You can think of ROAS as ad-focused, while ROI is business-wide.

Why is my ROAS below break-even?

You might be using outdated margins, or your creatives could be falling flat. Other times, it’s due to attribution delays, especially if your sales cycle is longer or your revenue comes in post-purchase.

Can creative testing help improve ROAS?

Yes. Testing different creatives helps you find the combinations that drive engagement and conversions. Stronger creative usually means higher click-through rates and lower customer acquisition costs, which both lead to better return on ad spend. It also helps you spot and replace underperforming ads before they waste budget. 

Is break-even ROAS different for ecommerce vs. SaaS?

It is. Ecommerce brands usually factor in things like product cost and shipping. SaaS companies think about support, onboarding, and churn. Each model has different margins, so the break-even point shifts.

Should I include shipping costs in my ROAS formula?

If you cover shipping, definitely include it when calculating ROAS. Add it to your total cost of goods so your gross margin and your break-even number reflect reality.

What’s the fastest way to fix a declining ROAS?

Start by auditing your creatives. Refresh your hook, headline, or offer and run quick tests. Then look at your landing page and make sure it’s aligned with your ad. Small tweaks here can make a big difference, fast.

What’s more important: ROAS or conversion rate?

ROAS shows you profitability, while conversion rate tells you how well your page is doing. If your conversion rate is high, but your ads are too expensive, you’re still losing money. ROAS helps you keep the full picture in focus.

How Bestever can help you hit your break-even ROAS

Knowing how to calculate break-even ROAS is only half the equation. The real challenge is hitting that number and staying above it. That’s where creative makes all the difference.

Even the most carefully planned media strategy can fall flat if your ads aren’t resonating. Strong creatives help lower your customer acquisition cost and improve overall ROAS. But knowing which creative to fix (and how to fix it) isn’t always obvious. Bestever can help.

Bestever is a creative performance tool that shows you exactly what’s working in your ads — and what’s holding them back. It can analyze, score, and break down every element of your creative, then give you specific, fast suggestions to help you optimize before your budget gets burned.

Here’s how Bestever can help your ad strategy:

• Analyze your ads' effectiveness: Bestever’s Ad Analysis Dashboard gives you instant feedback on an ad's visual impact, brand alignment, sales orientation, and audience engagement. It’ll even break down each element in detail. 
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• Get suggestions to improve every frame: If an ad isn’t hitting the mark, ask Bestever to tell you what’s wrong and get instant, actionable suggestions on what to do to fix it. No more guessing or wasting time — your team can start fixing those issues asap. 
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• Understand your audience: Bestever’s audience analysis tools go beyond sharing standard demographics, helping refine both targeting and messaging. You can share your website URL or integrate it with your ad manager, and it’ll quickly let you know who wants to hear more from you. 
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• ‍Instant feedback loop: Know immediately why an ad variant underperforms, then pivot before wasting your budget. This can help you hit your break-even ROAS quickly, so you can focus on becoming profitable.
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• Rapid asset generation: Fetch AI-generated images, stock photos, and video clips that all fit your brand voice. Then you can share the creatives with your team to make multiple ad variations faster.

Ready to hit your break-even ROAS and push beyond it? Let our team show you how Bestever helps you create ads that perform.

Schedule a free demo of Bestever now.