The direct answer
Break-even ROAS must reflect the costs the sale actually carries. First calculate contribution before advertising. Then divide revenue per order by the maximum advertising cost that contribution can support. State which costs and taxes you included.
The number is only as honest as its cost stack.
Start with the selling price on a consistent VAT basis. Deduct COGS, packing, fulfilment, delivery subsidies, payment fees, per-sale platform fees and an appropriate returns allowance. If you allocate fixed admin or platform costs per order, make that allocation visible.
Revenue can look impressive while each acquired order leaves very little room for the team, software and owner. A platform ROAS report does not perform this cost reconciliation for you.
Calculate the advertising ceiling.
Illustration: a R1,000 order carries R400 product cost, R60 shipping subsidy, R20 fulfilment, R40 other allocated costs and R30 payment/platform fees. Contribution before advertising is R450.
The maximum break-even advertising cost per order is R450 on that defined cost basis. Break-even ROAS is R1,000 ÷ R450, or approximately 2.22. At R300 advertising acquisition cost, R150 remains on the same basis. Costs omitted from the stack still need paying.
Do not compare unlike revenue.
Gross sales, net sales, collected cash and platform-attributed purchase value can differ. Refunds, cancellations, taxes and delivery income affect the comparison. Use one reconciled definition for the calculation and campaign review.
Repeat purchases can improve customer economics, but future purchases are not guaranteed. Separate first-order contribution from observed cohort contribution over a stated period. Otherwise a hoped-for sequel becomes an excuse for a loss-making first order.
A zero contribution is a stop sign.
If non-ad costs consume the entire sale, no positive advertising spend can break even on that order. If contribution is negative, more volume multiplies the loss under those assumptions.
Review pricing, product mix, costs or bundles before asking an ad campaign to solve the arithmetic. The useful question is not whether a dashboard turns green. It is whether the business can afford the next customer.
Put your own numbers into it.
Use the free calculator, change the inputs and keep a private snapshot of your scenarios.
Run my numbers →What to check next
- Include shipping and payment fees, not only COGS.
- Reconcile revenue and refund definitions.
- Separate first-order economics from observed repeat purchases.
Questions worth answering
What is the break-even ROAS formula?
Revenue per order divided by contribution per order before advertising, provided that contribution is positive. The result depends on the cost basis you entered.
Is break-even ROAS the same as a profit target?
No. Break-even covers the defined costs. A profit target requires room above those costs and any omitted overhead.
The ad is part of the job. The journey is the job.
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