Break-even ROAS
One divided by your margin. On a 45% margin you need 2.22x just to stand still. Every campaign below that line is losing money no matter how good the ROAS looks next to the industry average.
Free tool
ROAS calculator: is your ad spend actually profitable?
Return on ad spend on its own tells you nothing about profit. Put your product margin in and this works out what you really keep, what your break-even point is, and how far off it you are. Nothing leaves your browser.
Your ROAS
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Break-even ROAS
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break-even
- Clicks a month
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- Orders a month
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- Revenue
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- Gross profit
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- Profit after ad spend
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- Cost per order
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- Most you can pay per order
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- Profit per $1 of ad spend
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What would have to change
How to read it
ROAS is not profit, and the gap is where money disappears.
Cost per order
The ceiling is your order value times your margin. Pay more than that for a customer and you are buying revenue with your own profit, which works right up until the cash runs out.
The three levers
Cheaper clicks, a site that converts more of them, or a bigger order value. Most accounts we audit are stuck on the second one, and the fix is on the website rather than inside the ad account.
What this leaves out
Repeat purchases, returns, agency fees and the orders that came from somewhere else and got credited to ads. All of those move the answer, which is why a real audit looks at the account and not just a formula.
If the numbers say your clicks are too expensive, that is a paid advertising problem. If they say too few visitors buy, that is a web design and conversion problem.
Questions we get often
Before you ask
What is a good ROAS?
There is no universal number, which is why comparing yours to an industry average is a waste of time. The only figure that matters is your break-even ROAS, which is one divided by your gross margin. On a 40% margin you need 2.5x to stand still; on an 80% margin you need 1.25x. A 3x ROAS is excellent for one business and a slow bleed for another.
Why does the calculator ask for my profit margin?
Because ROAS is measured on revenue, and you cannot spend revenue. If you sell an item for $60 that costs you $33 to buy, pack and ship, only $27 is available to pay for the advertising. Leave margin out and the campaign can look like it is returning 2x while it quietly loses money on every order.
Is my data sent to Freedom Fusion?
No. The arithmetic runs in your browser and nothing is transmitted or stored. Figures only reach us if you press "Have us check these numbers", which copies them into the enquiry form for you to review and send yourself.
My ROAS is above break-even but I still have no cash. Why?
This calculator covers a single purchase and the direct cost of it. Agency fees, salaries, rent, returns, payment charges and the ads that get credit for sales they did not cause all sit outside it. Break-even ROAS is the floor you must clear, not the target you should aim at.
Which lever should I pull first?
Usually conversion rate, because it is the cheapest to move and it improves every channel at once, not just the ads. Halving your cost per click is hard; taking a checkout from 1.8% to 2.6% is often a matter of page speed, a clearer offer and fewer form fields.
Second opinion
Send us the numbers and we will tell you what is wrong.
Press the button above and your figures drop straight into this form. We will come back with where the money is leaking and what we would change first — whether or not you hire us.