The ROAS your ads have to beat before a sale makes any money. Worked out from your real costs and fees, not a rule of thumb, because a ROAS of 3 is profitable for one store and a loss for another.
| ROAS | Profit per $1 spent | Verdict |
|---|---|---|
| 1× | −$0.54 | loss |
| 1.50× | −$0.30 | loss |
| 2× | −$0.07 | loss |
| 2.16× | +$0.00 | break even |
| 2.50× | +$0.16 | profit |
| 3× | +$0.39 | profit |
| 4× | +$0.85 | profit |
| 5× | +$1.32 | profit |
| 6× | +$1.78 | profit |
Read the table against your campaigns. Anything below 2.16× is costing you money on every sale, no matter how good the revenue looks.
Why this beats the usual formula. Most break even ROAS calculators divide one by your gross margin, which subtracts only the product cost. That ignores the payment fee and the shipping you absorb, so it reports a lower break even than reality and makes campaigns look profitable when they are not.
Margio takes it further again: it calculates your break even ROAS from real product costs and the actual fee on every order, then reports it beside your blended ROAS across Meta and Google, so you see the number you are hitting and the number you need in one place.
See how Margio worksBreak even ROAS is the return on ad spend at which an advertised sale exactly covers its own costs, leaving no profit and no loss. It is one divided by the margin available before advertising. At a 40 percent margin, break even ROAS is 2.5, so every advertising dollar must bring back at least $2.50 in sales before the ad earns anything.
It matters because ROAS on its own is not a measure of profit. A campaign at 3.0 looks identical in every ad dashboard whether you sell at a 25 percent margin or a 60 percent one, but in the first case it is losing money on every order and in the second it is comfortably profitable. Break even ROAS is what turns the ratio into a decision.
Break even ROAS = 1 ÷ margin, where margin is the share of the selling price left after cost of goods, payment fees and any shipping you absorb, written as a decimal. A 50 percent margin gives 1 ÷ 0.50 = 2.0. A 25 percent margin gives 1 ÷ 0.25 = 4.0. The thinner the margin, the harder your advertising has to work.
| Margin before ads | Break even ROAS | A ROAS of 3 is… |
|---|---|---|
| 20% | 5.00× | a loss |
| 25% | 4.00× | a loss |
| 33% | 3.03× | roughly break even |
| 40% | 2.50× | profitable |
| 50% | 2.00× | comfortably profitable |
| 70% | 1.43× | very profitable |
Use the margin left after every variable cost except advertising: cost of goods, payment fees, and the shipping you do not recover from the customer. Gross margin is the common shorthand, but it subtracts only the product cost, so it understates your break even ROAS and flatters every campaign you measure against it.
The difference is not small. On a $40 order costing $15 in product, gross margin is 62.5 percent and suggests a break even ROAS of 1.60. Add $5 of absorbed shipping and $1.46 of payment fees and the real margin is 46.4 percent, for a break even ROAS of 2.16. Measuring against 1.60 would keep campaigns running that lose money on every order.
Break even ROAS is the return on ad spend at which an advertised sale exactly pays for itself, leaving no profit and no loss. It is one divided by the margin available before advertising. At a 40 percent margin, break even ROAS is 2.5, so every advertising dollar must bring back at least $2.50 in sales.
Break even ROAS = 1 ÷ margin, where margin is the share of the selling price left after cost of goods, payment fees and any shipping you absorb, expressed as a decimal. A 50 percent margin gives 1 ÷ 0.50 = 2.0. A 25 percent margin gives 1 ÷ 0.25 = 4.0.
Use the margin left after every variable cost except advertising, which means cost of goods, payment fees and absorbed shipping. Gross margin is the common shorthand but it only subtracts the product cost, so it understates your break even ROAS and makes campaigns look more profitable than they are.
It depends entirely on your margin. A ROAS of 3 is profitable at a 40 percent margin, where break even is 2.5, and loses money at a 25 percent margin, where break even is 4.0. There is no universally good ROAS, only a ROAS that clears your own break even point.