Break-Even ROAS & Target CPA Calculator
A 3x ROAS can lose money. Whether it does depends on your margin, fulfillment cost, fees and returns. Enter your unit economics and get the ROAS and cost per acquisition your ads must hit to break even, to hit a profit target, and on a repeat-purchase basis.
Worked example: an $80 order at 60% gross margin, $8 fulfillment, 3% payment fees and 5% returns leaves $35.20 per order before ads. Break-even ROAS is 2.27x (CPA $35.20); keeping 10% profit needs 2.94x (CPA $27.20).
How the calculation works
Contribution per order = average order value × (1 − return rate) × gross margin − fulfillment cost − payment fees. That is the cash each order leaves you before advertising.
Break-even CPA equals that contribution: pay more than this to acquire an order and you lose money on it. Break-even ROAS = average order value ÷ break-even CPA. Target CPA subtracts the profit you want to keep per order; target ROAS follows from it.
If customers reorder, the repeat-purchase CPA multiplies contribution by expected orders per customer. Use it only when you can fund the payback period and you have measured repeat rates by acquisition cohort rather than assumed them.
How to choose the inputs
Gross margin: price minus landed product cost, as a share of price. Exclude shipping, fees and marketing; the calculator handles those separately.
Fulfillment: pick, pack, shipping and packaging per order, net of any shipping you charge the customer.
Return rate: the share of revenue refunded. Apparel brands commonly run far higher than electronics brands; use your own number.
Why platform ROAS overstates your margin of safety
Ad platforms credit themselves with conversions that would have happened anyway. Independent incrementality tests regularly find platform-reported ROAS well above the true incremental return. If your break-even ROAS is 2.3x and the platform reports 2.8x, you may already be under water.
Treat the break-even number as a floor for incremental ROAS measured with holdouts or geo tests, not as a target for the figure in your ads dashboard.
Frequently asked questions
What is a good ROAS?
There is no universal good ROAS. A brand with 75% margins can profit at 1.6x; a brand with 30% margins and high shipping costs may need 4x or more. Calculate your own break-even ROAS and judge performance against it.
How do I calculate break-even ROAS?
Break-even ROAS = average order value ÷ contribution per order, where contribution is net revenue after returns times gross margin, minus fulfillment and payment fees. At a 50% contribution margin, break-even ROAS is 2x.
What is the difference between CPA and CAC?
CPA is cost per acquisition for a specific conversion, often a single order. CAC is the fully loaded cost of acquiring a new customer, including all marketing and sales spend. Use CPA for campaign targets and CAC for unit economics.
Should I use first-order or lifetime value?
Set campaign targets on first-order contribution unless you have cohort data proving repeat purchases and the cash to wait for them. Bidding to lifetime value on assumed repeat rates is one of the most common ways DTC brands overspend.