Break-Even ROAS Calculator
Find the ROAS below which your advertising is losing money.
Every seller tracks ROAS. Far fewer know the ROAS at which they start losing money. That number is not an industry benchmark — it is a function of your margin, your fees and your return rate, and this calculator works it out from your own figures.
Product economics
Result
Fill in the fields above and your result will appear here.
What the Break-Even ROAS Calculator does
ROAS is revenue divided by ad spend. Break-even ROAS is the point where the profit an order generates exactly equals what you paid to acquire it. Above that you make money; below it you are buying revenue at a loss.
Returns matter here more than sellers expect, because you pay for the advertising whether or not the order completes. A 12% return rate does not reduce your contribution by 12% — it reduces it by more, since the shipping and packaging on failed orders are also lost.
How to use this tool
- Enter the selling price including GST and select the GST rate for your category.
- Enter your product cost and marketplace commission percentage.
- Put shipping, packaging and fixed fees into the fixed cost field — everything except advertising.
- Enter your combined return and RTO rate. Setting it to zero shows the pre-return figure for comparison.
- Set the net margin you want left after advertising, then read the target ROAS.
Formula and method
Net revenue = Price ÷ (1 + GST)
Contribution = Net revenue − Commission − Fixed costs − COGS
Adjusted = Contribution × (1 − Return rate)
− Return rate × Fixed costs
Break-even ROAS = Net revenue ÷ Adjusted contribution
Break-even ACOS = Adjusted contribution ÷ Net revenue × 100
Target ROAS = Net revenue ÷ (Adjusted contribution − Target profit)
ACOS is simply the inverse of ROAS expressed as a percentage. Amazon reports ACOS; Meta and Google report ROAS. Both are shown so the figure can be used on any platform.
Worked example
Example: ₹999 product, ₹350 cost, 13% commission, 12% returns
| Net revenue after GST | ₹847 |
| Contribution before ads | ₹262 |
| After 12% returns | ≈ ₹218 |
| Break-even ROAS | 3.88× |
| Break-even ACOS | 25.8% |
Any campaign running below 3.88× ROAS is losing money on this product, however good the sales volume looks.
What your result means
Break-even ROAS below 3 means healthy margins and room to bid aggressively for market share.
Between 3 and 5 is normal for a competitive Indian marketplace category. Campaigns need careful management.
Above 5 means margins are too thin to buy traffic profitably. Raise the price, cut costs or rely on organic ranking instead.
Max ad spend per order is the practical number for setting bids: it is the absolute ceiling on cost per acquisition.
Important considerations
- ROAS on the platform counts only attributed sales. Advertising that lifts organic ranking has value the reported figure misses, so a slightly sub-break-even campaign can still make sense during a launch.
- New products often need loss-making advertising to build reviews and ranking. Treat that as a budgeted investment with an end date, not as normal operations.
- Blended ROAS across all orders matters more than campaign-level ROAS. A campaign at 6× is irrelevant if it produces 5% of your volume.
- Attribution windows differ between platforms. Comparing a 7-day window with a 30-day one will mislead you.
- If your break-even ROAS is unachievable, the problem is the product economics, not the campaign settings.
Limitations of this tool
- It assumes advertising cost is incremental — that the orders would not have occurred without it. In practice some advertised sales would have happened organically.
- It works at product level. Portfolio effects, cross-selling and repeat purchases are not modelled.
- Lifetime value is ignored. For consumables with genuine repeat purchase, a lower first-order ROAS can be rational.
Frequently asked questions
What is a good ROAS for an Indian seller?
There is no universal figure — it depends entirely on your margin. A product with 40% contribution margin breaks even around 2.5×, while one at 15% needs nearly 7×. Compute your own break-even point and judge campaigns against that.
What is the difference between ROAS and ACOS?
They are inverses. ROAS is revenue ÷ ad spend; ACOS is ad spend ÷ revenue as a percentage. A 4× ROAS is a 25% ACOS. Amazon reports ACOS, most other platforms report ROAS.
Should I ever run ads below break-even?
Deliberately and temporarily, yes — to build reviews and organic ranking on a new listing, or to clear ageing stock before storage fees accumulate. It should be a budgeted decision with a defined end, not a permanent state.
Why does my return rate change the required ROAS so much?
Because you pay for advertising on every order, including the ones that come back. Returns reduce the contribution available to cover ad spend while leaving the ad spend itself unchanged.