The formulas
Break-even CPA is the most you can pay in ads to win one order without losing money on it. Break-even ROAS is the same line, expressed the way ad platforms report.
Worked example
Illustrative numbers: $50 average order, product cost 35%, fees 3%, refunds 4%, shipping $6.
$50 / $23 = 2.17 break-even ROAS
A campaign reporting a ROAS of 2.0 looks positive on the dashboard and loses about $2 an order. To keep $5 profit an order, the ROAS has to reach $50 / ($23 - $5) = 2.78.
Break-even calculator
Three things that move the line
- Order value. Bundles and upsells raise AOV and lower the ROAS you need.
- Refunds. Each refund takes back the revenue and keeps the ad cost.
- Shipping. A flat shipping cost hurts small orders most.
Go further
Ad Spend Template
$17 · 30-day refund
A 4-tab interactive calculator for your break-even ROAS, maximum profitable CPA and budget rules.
The full 4-tab version, with budget rules.
Ad Scaling Command Center
$147 · 30-day refund
Break-even and maximum safe CPA, KPI dashboards and rules for when to scale, kill or refresh, across 8 assets.
Questions
How do you calculate break-even ROAS?
Break-even ROAS = average order value / contribution per order before ads, where contribution = AOV x (1 - product cost % - fees % - refund %) - shipping per order.
What is a good ROAS for ecommerce?
There is no universal number. A good ROAS is one above your own break-even ROAS, by enough to leave the profit you want per order.
What is maximum CPA?
The most you can pay to acquire one order. At break-even it equals your contribution per order before ads.