Breakeven ROAS calculator
The calculator needs four inputs: your contribution margin, any tax inside your conversion value, your return rate and the profit you want after ads. It returns the break-even in your ad account, your target ROAS and both values in the percentage format Google Ads uses.
US stores usually send conversion values without sales tax, so the tax field starts at 0. If you sell in the UK or EU and your tracking passes prices with VAT, enter your rate there, for example 20 for the UK.
Find your break-even and your target ROAS
- Break-even on revenue after returns3.33
- Break-even in your ad account as a percentage444.4%
- Target ROAS as a percentage (Google Ads format)666.7%
Set your target ROAS to 666.7%. Campaigns below 4.44 in your ad account cost you money.
The break-even ROAS formula
ROAS divides revenue by ad spend. You reach break-even when ad spend eats up your entire contribution margin. That gives you the base formula:
Work out your contribution margin first: revenue minus product cost, shipping, packaging, payment fees and return handling. Gross margin from your purchase price alone leaves too much out.
Google Ads rarely knows about your refunds. It keeps every order in the conversion value, even the ones that come back. That calls for the extended formula:
To calculate ROAS itself from your spend and revenue and follow it through to profit, use the ROAS formula calculator. It runs the same store as this page.
Worked example: what $10,000 in conversion value leaves you
A US apparel store reports $10,000 in conversion value to Google Ads, without sales tax. A quarter of the goods come back. Contribution margin on the revenue the store keeps is 30%.
- After 25% returns the store keeps $7,500.
- 30% of that is $2,250 in contribution margin.
- If the store spends exactly $2,250 on ads, it breaks even. ROAS at that point: $10,000 ÷ $2,250 = 4.44.
A ROAS of 4 looks healthy in this store and still costs money. On $10,000 in revenue that means $2,500 in ad spend, a $250 loss.
Break-even ROAS by contribution margin and return rate
The table shows break-even in your ad account with no tax in the conversion value. The 0% returns column equals the break-even on revenue after returns. The last column is for UK and EU sellers with 20% VAT in the value and 25% returns.
| Contribution margin | 0% returns | 10% returns | 25% returns | 40% returns | 20% VAT, 25% returns |
|---|---|---|---|---|---|
| 20% | 5.00 | 5.56 | 6.67 | 8.33 | 8.00 |
| 25% | 4.00 | 4.44 | 5.33 | 6.67 | 6.40 |
| 30% | 3.33 | 3.70 | 4.44 | 5.56 | 5.33 |
| 35% | 2.86 | 3.17 | 3.81 | 4.76 | 4.57 |
| 40% | 2.50 | 2.78 | 3.33 | 4.17 | 4.00 |
| 50% | 2.00 | 2.22 | 2.67 | 3.33 | 3.20 |
| 60% | 1.67 | 1.85 | 2.22 | 2.78 | 2.67 |
An apparel store with 30% margin and 40% returns needs 5.56 in its ad account. A supplement brand with 60% margin and almost no returns makes money from 1.67. According to the NRF 2025 Retail Returns Landscape, US shoppers were expected to return 19.3% of online sales in 2025, so the 0% column fits few stores.
From break-even to target ROAS in Google Ads
Break-even is the floor. To make a profit after ads, subtract your target profit from your contribution margin and calculate with what is left:
Google Ads expects target ROAS as a percentage: $5 in sales ÷ $1 in ad spend × 100% = 500%. The calculator shows 666.7%, which you round to 667%. The same logic applies to Search, Shopping and Performance Max. Enter a value without this math and Google optimizes toward a number unrelated to your profit.
| Contribution margin | Break-even in account | Target ROAS at 10% profit | In Google Ads |
|---|---|---|---|
| 30% | 4.44 | 6.67 | 667% |
| 35% | 3.81 | 5.33 | 533% |
| 40% | 3.33 | 4.44 | 444% |
| 50% | 2.67 | 3.33 | 333% |
Table assumptions: no tax in the conversion value, 25% returns. Google recommends at least 15 conversions in the past 30 days before you use target ROAS on Search and Shopping. Change an existing target in small steps. Large jumps throw the bid strategy off.
What lowers your break-even ROAS
A lower break-even means more campaigns pay off and you can bid higher. The starting point is the store above: 30% contribution margin, 25% returns, no tax, so 4.44 in the account.
| Lever | New break-even in account | Change |
|---|---|---|
| Contribution margin +1 point (31%) | 4.30 | −0.14 |
| Returns −1 point (24%) | 4.39 | −0.06 |
| Returns −5 points (20%) | 4.17 | −0.28 |
| Contribution margin +5 points (35%) | 3.81 | −0.63 |
| Tracking revenue after refunds | 3.33 | −1.11 (display only) |
One point of margin moves break-even more than twice as far as one point of returns. Sending revenue after refunds only changes the number on screen. Your profit stays the same, but your ad account then speaks the same language as your books.
Break-even CPA: the most you can pay per order
You can also work with cost per order. Break-even CPA is the contribution margin an average order brings in. It suits stores with similar basket sizes and campaigns bidding on target CPA.
| Order value in ad account | Break-even CPA | Target CPA at 10% profit |
|---|---|---|
| $50 | $11.25 | $7.50 |
| $100 | $22.50 | $15.00 |
| $150 | $33.75 | $22.50 |
| $250 | $56.25 | $37.50 |
Assumptions: 30% contribution margin, 25% returns, no tax. If your basket sizes swing a lot, stay with ROAS. A fixed CPA holds back exactly the large orders you want.
Break-even for new customers: when you can go below
Break-even ROAS judges a single order. If a new customer buys again later, the first order can bring in less than it cost. How much less depends on lifetime value, which you get from an LTV calculation based on contribution margin.
In the example, a $100 order brings $22.50 in contribution margin. That is your maximum ad spend per order. If a new customer adds $50 in contribution margin over two more purchases, you can choose to spend more to win them.
Google Ads supports this with the customer acquisition goal. In new customer value mode, Google bids higher for new customers than for existing ones. It identifies existing customers from the customer lists and website tag data you provide.
Ad account or store: which number counts
Break-even in your ad account is a steering value for bids. Whether you actually make money shows up in your store backend: revenue after refunds, minus variable costs, minus ad spend. Platforms sometimes count the same purchase twice when a buyer saw ads on more than one channel.
That is why Harucon measures in the store backend, including for our guarantee of +$100,000 in 90 days.
Breakeven ROAS FAQ
What is breakeven ROAS?
Breakeven ROAS is the ROAS at which ad spend equals the contribution margin your ads bring in. Above it you make money, below it every order loses money.
How do I calculate breakeven ROAS?
Divide 1 by your contribution margin. At 40% margin, break-even is 2.5. If your ad account counts orders before refunds, divide by 1 minus your return rate as well. At 25% returns that gives 3.33.
Why is my break-even higher in the ad account?
Your ad account keeps refunded orders in the conversion value, and sometimes tax too. Neither ever reaches you as contribution margin, so the threshold in the account has to sit higher.
What is the difference between breakeven ROAS and target ROAS?
Breakeven ROAS is the zero line. Target ROAS adds the profit you want. At 30% contribution margin, 10% target profit and 25% returns, target ROAS is 6.67, or about 667% in Google Ads.
Do US stores need to account for sales tax?
Only if your conversion value includes it. Most US setups send order values without sales tax, so you leave the tax field at 0. UK and EU sellers with gross tracking enter their VAT rate.
Can my ROAS be below break-even?
For new customers who buy again, yes, as long as their lifetime value closes the gap. For existing customers and one-time buyers, a ROAS below break-even does not pay off.
Which campaigns sit below your break-even?
On the intro call, Tobias works out your break-even with the numbers from your store and shows you where budget leaks. 5 quick questions, then straight to booking.
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