🎯 What Is Break-Even ROAS?
Ad Managers only show Revenue ÷ Ad Spend. Your Break-Even ROAS tells you the minimum ROAS needed to cover COGS, shipping, and payment fees so you don't lose money on ad orders.
1. Profit Before Ads = Order Price − COGS − Shipping − Platform Fee
2. Gross Margin % = Profit Before Ads ÷ Order Price
3. Break-Even ROAS = 1 ÷ Gross Margin %
2. Gross Margin % = Profit Before Ads ÷ Order Price
3. Break-Even ROAS = 1 ÷ Gross Margin %
📊 Quick Reference Table
| Gross Margin % (Before Ads) | Break-Even ROAS | Target ROAS (For 20% Net Profit) |
|---|---|---|
| 80% (Digital / SaaS) | 1.25x | 1.67x |
| 65% (Beauty / Supplements) | 1.54x | 2.22x |
| 50% (Apparel / Standard DTC) | 2.00x | 3.33x |
| 35% (Low-Margin Dropshipping) | 2.86x | 6.67x |
💡 Fast Example ($60 Order)
Sell a bundle for $60 with $19.04 in total product + shipping + Stripe fees = $40.96 gross profit (68.3% margin). Divide 1 ÷ 0.683 = 1.46x Break-Even ROAS. Anything above 1.46x is pure profit!