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Break-even ROAS and contribution margin calculator

Platform ROAS tells you what the ad account saw. This tells you what the business needs: the minimum ROAS at which an order stops losing money, and the ROAS that leaves the profit you actually want.

Currency

Your order Per order placed

The order value your ad platform reports as a purchase: after discounts, including tax and shipping charged to the customer.
₹
GST, VAT or sales tax included in the order value. Use 0 if your prices exclude tax, as is common in the US.
%
%

As a share of net selling price, excluding tax.

%

Fulfilment and returns

₹

Pick, pack and forward shipping per order.

Share of placed orders that are returned or never delivered (RTO). For cash-on-delivery heavy Indian brands this is often 10–25%.
%
₹

Return shipping and handling for each returned order.

₹

Packaging, COD fees, inserts, samples.

Your goal

The profit you want to keep after paying for the ad that acquired the order, as a share of kept net revenue.
%
Break-even ROAS–See breakdown

Private by design: calculations run on your device and nothing you enter is stored or sent.

Built and reviewed by Shiva Sharma. Updated .

How it is calculated

The calculator works per order placed, because that is what Meta and Google count as a conversion. It strips out what the business never keeps, then asks how much of what is left you can spend to acquire the order.

Net revenue      = AOV ÷ (1 + tax rate)
Kept revenue     = Net revenue × (1 − return rate)
Contribution     = Kept revenue − COGS − payment fees − shipping
                   − (return rate × reverse cost) − other costs
Break-even CAC   = Contribution
Break-even ROAS  = AOV ÷ Break-even CAC
Target CAC       = Contribution − (target margin × kept revenue)
Target ROAS      = AOV ÷ Target CAC

AOV is the order value your ad platform reports: after discounts, including tax. Returned and undelivered (RTO) orders are assumed to come back to stock, so their product cost is recovered, but the shipping both ways is lost.

How to use the result

Set your account-level ROAS guardrail at the target, not the break-even. Break-even is the floor where you buy revenue at zero profit; useful for prospecting tests that you expect to pay back through repeat orders, dangerous as a standing target. If you sell several products with very different margins, run the calculator per margin tier and split campaigns the same way.

Questions

What is break-even ROAS?

Break-even ROAS is the return on ad spend at which an order covers all of its variable costs and its acquisition cost, leaving zero profit. Below it, every order bought through ads loses money.

How do you calculate break-even ROAS?

Divide average order value by contribution per order. Contribution is the revenue you keep after tax, returns, product cost, payment fees, shipping, reverse logistics and other variable costs. For example, a ₹1,800 order with ₹750 of contribution has a break-even ROAS of 1,800 ÷ 750 = 2.4.

Is break-even ROAS the same as 1 ÷ gross margin?

Only if you ignore tax, shipping, fees and returns. The 1 ÷ margin shortcut usually understates the true break-even ROAS for D2C brands, sometimes by 30% or more, which is why it should be calculated from contribution margin.

What is a good ROAS?

There is no universal good ROAS. A good ROAS is one comfortably above your own break-even ROAS. A 3.0 ROAS is excellent for a brand that breaks even at 1.8 and loss-making for one that breaks even at 3.5.

What is the maximum CAC I can afford?

On a first-order basis, your maximum CAC is your contribution per order. If you can prove repeat purchases, you can stretch it towards your contribution lifetime value; use the LTV and payback calculator for that.

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