What ROAS means
ROAS means return on ad spend. In simple planning math, ROAS is revenue attributed to ads divided by ad spend. If $500 of ad spend produces $1,500 of tracked revenue, the reported ROAS is 3.0x.
What break-even ROAS means
Break-even ROAS is the ROAS needed for ad-attributed orders to cover their pre-ad costs. If an order has $75 of revenue and $30 of contribution before ads, the break-even cost to acquire that order is $30. The break-even ROAS is $75 / $30, or 2.5x.
Start with contribution before ads
Contribution before ads is average order value minus product cost, shipping, packaging, fees, returns, and other variable costs. You can add a conservative repeat-purchase profit credit if your business has reliable repeat purchase data, but it should not be guessed.
ROAS vs CPA vs CAC
CPA is cost per acquisition or cost per conversion. CAC is customer acquisition cost. In simple one-order planning, max CAC before break-even equals contribution before ads. ROAS looks at revenue per ad dollar; CPA/CAC looks at ad cost per order or customer.
Target-profit ROAS
Break-even is not the same as healthy. If you want $5 of profit after ads, subtract that $5 from contribution before ads before calculating allowable CAC. This creates a higher target ROAS than pure break-even.
Tracking limitations
- Ad platforms may use different attribution windows.
- Reported conversion value can include tax, shipping, discounts, or refunds differently depending on setup.
- ROAS does not automatically prove that ads caused incremental sales.
- Repeat purchase value should be based on real retention data, not hope.
Use the calculator
Use the Break-even ROAS and CAC Calculator to estimate break-even ROAS, target-profit ROAS, max CAC, projected CPA, projected ROAS, and projected profit after ads.