Unit Economics • Financial Guide

How to Calculate Break-Even ROAS for Shopify & TikTok Shop Ads (With Formula)

Learn the exact Break-Even ROAS formula for Meta, Google, and TikTok ads so you never lose money scaling paid acquisition campaigns.

🎯 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 %

📊 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!