The ROAS at which your ads stop losing money. The simple version only covers the cost of the products sold; the fuller version also covers your fixed costs.
Formula
Simple (variable costs only): breakeven ROAS = 1 ÷ margin, where margin = (price − variable costs) ÷ price. Full (with fixed costs): breakeven ROAS = (fixed costs + ad spend) ÷ (margin × ad spend)
Example
Meera's clothes cost 30% of price, so her margin is 70% and her simple breakeven ROAS is 1 ÷ 0.70 = 1.43x. Once her ₹2,40,000 of monthly fixed costs are included, the breakeven at ₹1,00,000 of ad spend is (₹2,40,000 + ₹1,00,000) ÷ (0.70 × ₹1,00,000) = 4.86x.
How you'll hear it
“Our simple breakeven ROAS is 1.43x, so anything above that pays for its own stock, but we need 4.86x to cover rent this month.”
What it helps you decide
The minimum ROAS to accept before you cut a campaign, and the target ROAS you set in bidding. The simple version tells you whether each extra sale pays for itself; the full version tells you whether the month is profitable.
Where people misread it
People quote 1 ÷ margin as the line between profit and loss. It only covers the cost of goods, so a store can run above it every month and still fail to pay rent. Others forget shipping and payment fees, which raise the bar.
The story
Meera's agency tells her: your margin is 70%, so your breakeven ROAS is 1.43x. Anything above that is profit. Her ads run at 4x, so she feels safe.
The 1.43x is real, but it answers a narrow question. It says each extra ₹1 of ads pays for the clothes it sells. It does not pay rent.
| Margin after clothes | 70% |
| Simple breakeven: 1 ÷ 0.70 | 1.43x |
| Fixed costs to cover | ₹2,40,000 |
| Full breakeven: (₹2,40,000 + ₹1,00,000) ÷ (0.70 × ₹1,00,000) | 4.86x |
|---|
At 4x she is above the simple line and below the full one. Her ads make ₹1,80,000 after clothes and ad spend, but rent and salaries take ₹2,40,000, so the month ends at −₹60,000.
Online orders also carry about ₹100 of shipping and packaging and a 2% payment fee on a ₹2,000 order. That cuts her margin from 70% to 63%, and the simple breakeven rises from 1.43x to 1.59x.
Use the simple breakeven to decide whether one more rupee of ads is worth it. Use the full breakeven to decide whether the business, at this spend, pays its bills.
All figures are illustrative.
Find your simple and full breakeven ROAS
The example's numbers are filled in. Replace them with yours.
Below the simple breakeven, each sale loses money. Between the two, sales pay for themselves but not for rent and salaries. Above the full breakeven, the month is profitable.
Don't confuse it with
- ROAS: the result you got; breakeven ROAS is the bar it has to clear.
- Target ROAS: a bid setting you give Google Ads or Meta, which you may set above breakeven.
Related terms
Want to use this at work? AI-led PPC Excellence is aFactor's 16-week program for paid ads.
Sources
- Break-Even ROAS Calculator: How To Measure Break-Even ROAS, Shopify, 2026
- About Target ROAS bidding, Google Ads Help