What is break-even ROAS?
Break-even ROAS is the lowest return on ad spend at which an order still pays for its product, shipping, payment fees and the ads that sold it. Above it you make money on each sale; below it you lose some. It depends only on your contribution margin, which is why two stores with the same ROAS can end up with opposite results.
The formula
This assumes each order is a first sale from the ad and leaves out fixed costs such as salaries, software and rent. Repeat purchases are not counted. Returns and packaging go in other costs.
Worked example
At a 2.40× ROAS, each $100 of ad spend leaves $32.80 after product, shipping and fees.
Using it on Meta ads
Compare each campaign's ROAS with your break-even, not with someone else's average. Check the cost side too: a rising CPM or a falling CTR is often what pushes an ad under the line first.
Break-even CPA is the same line seen from the other side: the most one purchase can cost. The CPA calculator shows what you pay today, and if customers come back to buy again, the LTV calculator shows how much a first order can afford to lose. Ada compares your ROAS with the target you set, every day.
Questions
There is no single good number, because it follows from your margin. A store that keeps half of each order breaks even at a 2.00× ROAS; one that keeps a quarter needs 4.00×. The lower your break-even ROAS, the more room your ads have.
No. Break-even ROAS is the floor where ads stop losing money on the first order. A target ROAS sits above it by the profit you want to keep, or below it if repeat purchases pay back the first order.
Gross margin usually leaves out shipping and payment fees, and you pay both on every order an ad brings in. Leaving them out makes break-even ROAS look lower than it is.
Use both. Meta credits sales inside its attribution window, which can include sales that would have happened anyway. Store revenue divided by ad spend is a stricter check; if both sit above break-even, the ads are paying.
