Breakeven ROAS Calculator
Calculate your breakeven ROAS based on your CM2 margin. Enter your gross AOV, VAT rate, COGS, shipping, and payment fees – instantly see the minimum ROAS to break even.
Breakeven ROAS Calculator
Calculate the minimum gross revenue each $1 of ad spend must generate to break even.
CM1 (Product Margin)
55.0%
CM2 (Order Margin)
45.4%
Breakeven ROAS
2.20x
For every $1 of ad spend, you need at least this much gross revenue to cover all variable costs.
Quick reference
Breakeven ROAS at different CM2 margins
| CM2 Margin (net) | Breakeven ROAS |
|---|---|
| 20% | 5.00x |
| 25% | 4.00x |
| 30% | 3.33x |
| 35% | 2.86x |
| 40% | 2.50x |
| 45% | 2.22x |
| 50% | 2.00x |
| 60% | 1.67x |
| 70% | 1.43x |
How does the breakeven ROAS calculator work?
1. Enter your gross AOV and tax rate
The calculator automatically computes your net AOV. Set VAT/sales tax to 0% if you operate in a tax-free jurisdiction.
2. Fill in your variable costs (net values)
COGS as % of net revenue, shipping cost per order, payment processing fee (e.g., Stripe 2.9%), return rate, and any other variable costs.
3. Read your breakeven ROAS
The calculator shows CM1 (product margin), CM2 (order margin), and your breakeven ROAS. CM2 is the margin available to cover ad spend.
The formula
Breakeven ROAS is the ratio of gross AOV to net CM2 amount. We use gross revenue because ad platforms (Google Ads, Meta) report gross revenue.
Or: Breakeven ROAS = 1 / (CM2% × (1 + Tax%))
Why does VAT/tax matter?
Many store owners calculate profit using gross revenue, which paints a false picture. VAT or sales tax isn't your revenue — you pass it through to the government. A 40% net margin is only 31.5% on a gross basis with 27% VAT. This difference can easily mean you're advertising at a loss while thinking you're profitable.
Industry benchmarks
| Platform | Average ROAS |
|---|---|
| Google Shopping | 3.0–4.5x |
| Meta (Facebook/Instagram) | 2.2–4.0x |
| TikTok Ads | 1.4–2.0x |
| Industry average (2024) | 2.87x |
Source: Triple Whale, Varos, Northbeam aggregated DTC data. Breakeven ROAS varies by store — the industry average is not your break-even point.
Frequently asked questions
What is breakeven ROAS?
Breakeven ROAS is the minimum return on ad spend at which your ad revenue exactly covers all variable costs. Below this, your ads lose money.
How do I calculate breakeven ROAS?
Breakeven ROAS = Gross AOV / Net CM2 amount. CM2 is net revenue minus COGS, shipping, payment fees, and other variable costs.
Why does VAT/sales tax matter for breakeven ROAS?
VAT is not your revenue — it's collected for the government. Using gross revenue overestimates your actual margin.
What is the difference between CM1 and CM2?
CM1 = Net revenue - COGS. CM2 = CM1 - shipping - payment fees - other variable costs. Breakeven ROAS is based on CM2.
How much buffer should I add above breakeven ROAS?
Add +20-30% above breakeven to cover CPM fluctuations and seasonal cost changes.
See your real profit clearly
Margyn automatically collects all costs and revenue so you can see your actual profit in real-time. For UNAS and Shopify stores.
No credit card required