Break-Even ROAS Calculator

How to use this break-even ROAS calculator

Fill in what 1 typical order looks like. Leave a box at 0 if that cost doesn't apply to you.

1. Selling price. What the customer pays for the products, before tax. Leave out any shipping fee they pay you.
2. Product cost. What you paid for the items in that order.
3. Shipping you pay. Your cost to send the order. If the customer pays part of it, enter only your share. Offer free shipping? Enter the full cost.
4. Payment and platform fees. Card processors and marketplaces often take a % of the sale plus a fixed amount per order. Enter both.
5. Returns. Your return rate is how many orders out of 100 come back. Cost per return is what 1 return costs you: the label, the handling, and the item if you can't sell it again.
6. Other costs per order. Packaging, inserts, pick and pack fees. Anything you pay again for every order.
7. Profit you want per order. The share of the selling price you want left once ads are paid for.

The calculator then gives you 4 numbers. Contribution margin is the money 1 order leaves you after every cost that comes with it, but before ads. Break-even ROAS is the lowest ROAS where ads still pay for themselves. Break-even CPA is the most you can spend on ads to get 1 order. CPA means cost per action, here the ad cost of 1 sale. Last, it shows a Target ROAS for your profit goal. Target ROAS is a Google Ads bid setting where you tell Google the return you want.

Here's the math:

• Contribution margin = kept sales - product cost of kept orders - shipping - fees - return costs - other costs.
• Margin % = contribution margin / selling price.
• Break-even ROAS = selling price / contribution margin. That's the same as 1 / margin %.
• Break-even CPA = contribution margin.
• Target ROAS for a profit goal = 1 / (margin % - profit %).

A few rules sit behind it. A returned order is refunded, so you lose its sale, but the item goes back on the shelf. Fees and shipping are paid on every order, even ones that come back. Margin and CPA round down. ROAS rounds up. That way no result looks better than it really is.

If your margin comes out at 0 or below, the calculator shows a red warning. At 0, each sale only just covers its own costs, so the first ad click puts you in the red. Below 0, every sale loses money before ads. Either way, no ROAS fixes that. You need a higher price or lower costs first.

The costs people forget

Most shops work out margin as price minus product cost. That number is too high, because 3 costs hide outside it.

• Free shipping. The customer pays $0 for it. You still pay the carrier on every order.
• Payment fees. They come off every sale, often as a % plus a fixed amount. On small orders the fixed part bites hardest.
• Returns. A returned order brings in nothing. You still paid to ship it, paid the fees, and now pay for the return too.

Here's how much that changes. You sell a $50 item that costs you $20. On paper that's a 60% margin, so your break-even ROAS looks like 1 / 0.60 = 166.67%. Now add the rest. You pay $8 to ship it free. Fees are 3% + $0.50, so $2.00. 10 in 100 orders come back, and each return costs you $10.

Per order, that works out like this:

• Kept sales: $50 x 90% = $45.00
• Product cost of kept orders: $20 x 90% = $18.00
• Shipping: $8.00
• Fees: $2.00
• Returns: 10% x $10 = $1.00
• Contribution margin: $45 - $18 - $8 - $2 - $1 = $16.00

$16 / $50 is a 32% margin. Your real break-even ROAS is $50 / $16 = 312.5%, or $3.13 per $1 once rounded up. That's almost double the 166.67% you'd get from price and product cost alone. Say your ads run at a 200% ROAS. Each order then costs $25 in ads. The 60% view says you keep $5. In fact you lose $9 on every order.

3 worked examples

Example 1: a simple shop with a profit goal. Your item sells for $40 and costs you $13. You pay $5 to ship it. Fees are 2.5% + $1.00, so $2.00. Returns are rare, so you leave that box at 0. Contribution margin = $40 - $13 - $5 - $2 = $20. That's a 50% margin. Break-even ROAS = $40 / $20 = 200%, or $2.00 per $1. Break-even CPA is $20. You want 10% of the price left as profit. Target ROAS = 1 / (50% - 10%) = 250%. At that ROAS, each order costs $16 in ads and leaves you $4.

Example 2: clothes with a lot of returns. A jacket sells for $120 and costs you $40. Shipping is $10. Fees are 3% + $0.30, so $3.90. Packaging adds $1. 30 in 100 orders come back, at $12 per return. Kept sales are $120 x 70% = $84. Product cost of kept orders is $40 x 70% = $28. Returns cost 30% x $12 = $3.60. Contribution margin = $84 - $28 - $10 - $3.90 - $3.60 - $1 = $37.50. That's a 31.25% margin. Break-even ROAS = $120 / $37.50 = 320%. Break-even CPA is $37.50. For 15% profit, Target ROAS = 1 / (31.25% - 15%) = 615.38%, so 616% rounded up. You can then spend up to $19.50 in ads per order.

Example 3: a cheap item that loses money before ads. You sell a $15 item that costs you $7. Free shipping costs you $7. Fees are 3% + $0.30, so $0.75. 10 in 100 orders come back, at $5 per return. Kept sales are $15 x 90% = $13.50. Product cost of kept orders is $7 x 90% = $6.30. Returns cost 10% x $5 = $0.50. Contribution margin = $13.50 - $6.30 - $7 - $0.75 - $0.50 = -$1.05. Each order loses $1.05 before any ads. There's no break-even ROAS here. Raise the price, add a small order fee for shipping, or bundle items so 1 shipment carries more sales.

How to use your break-even ROAS in Google Ads

Target ROAS takes a %

Target ROAS is a Smart Bidding strategy. Smart Bidding means Google's AI sets your bid in each auction. You set the average conversion value you want back for each $1 of ads. Google's own example: $5 in sales for $1 of ad spend is a 500% target. Google then sets bids to get as much conversion value as it can while it aims for that average. Some sales will come in above it and some below.

Since June 2026, Google has been renaming "Maximize conversion value with a Target ROAS" to plain "Target ROAS". The bidding works the same. You may see either name for a while.

So type the Target ROAS from this calculator as a %. Your break-even ROAS is the floor. A target below it tells Google that losing money is fine. Google also warns that a target set too high may limit your traffic. And it suggests you look at your past ROAS too. That's the Conv. value / cost column, times 100 to get a %. If your past ROAS sits far below your profit target, step up to it in stages.

Google lists some limits first. Your conversions need values. Search and Shopping campaigns need at least 15 conversions in the past 30 days.

Make conversion value match your selling price

Conversion value is the amount Google Ads records for each conversion, like the order total of a sale. Google says it can stand for sales revenue or profit margins. Your break-even ROAS only works if it's built on the same thing Google records.

• Tax and shipping. Google's purchase event guide for Analytics says to set value to price x quantity for all items. It says not to include shipping or tax. If your tag sends the full total anyway, enter the selling price with tax and shipping, and your full shipping cost. Then add the sales tax to your product cost. Like the product, you only keep paying it on orders that aren't returned.
• Profit as the value. Some shops send their margin per order as the conversion value. If yours sends the contribution margin, your break-even ROAS is 100%, whatever this calculator shows.
• Value rules. Conversion value rules adjust values by location, device or audience. Google's example raises values in New York by 20%. The adjusted value is what lands in your conversion value column, so it can drift away from your real sales.

To check, open the Value / conv. column. Google works it out as total conversion value / the number in your Conversions column. It should sit close to your average order before tax and shipping. If it's well above, tax, shipping or a value rule may be inside it. Then compare your Conversions column with the orders in your store. If Google shows far more, the same sale may be counted twice.

Take returns out with conversion adjustments

Buyers send things back after Google Ads has already counted the sale. Conversion adjustments let you correct the value. A retraction removes a returned purchase from your conversions and its value. A restatement lowers the value, for example when a buyer returns 1 of 2 pairs of shoes. You can only adjust online conversions if they were tracked with a transaction ID, which is your order number.

Timing matters. Google says Smart Bidding reads adjustments made within 7 days of when the conversion was first recorded. Overall you can adjust up to 54 days later.

This calculator assumes Google Ads counts the full price of every order, returns included. If you retract returns, Google's value already leaves the refunds out. Then multiply your break-even ROAS and your Target ROAS by your keep rate, which is 100% minus your return rate. In Example 2 that's 320% x 70% = 224% to break even, and a 431% Target ROAS for 15% profit.