# What is break-even ROAS?

> Break-even ROAS is the ROAS where your ads pay for themselves and no more. Work it out from your gross margin in one line, with a worked example.
- **Author**: Marxx
- **Published**: 2026-10-21
- **Category**: Metrics
- **URL**: https://marxx.ai/library-glossary/break-even-roas

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Break-even ROAS is the ROAS at which your ads pay for themselves and leave no profit. Below it you lose money on every sale. Above it you make money.

## The formula

Break-even ROAS = 1 / gross margin

Gross margin is the share of each sale left after the cost of the product. A INR 1,000 order that costs you INR 400 to make and ship has a 60% margin.

## A worked example

You sell a INR 1,000 face serum. Making, packing and shipping it costs INR 400.

1. Gross margin = (1,000 − 400) / 1,000 = 0.60
2. Break-even ROAS = 1 / 0.60 = **1.67**

So every INR 1 of ad spend must bring back INR 1.67 in sales just to break even. At a ROAS of 2.5, each INR 1 of spend brings back INR 2.50. Product costs take INR 1.00 and the ad takes INR 1.00, so you keep INR 0.50 of profit, before other costs.

## Quick reference

| Gross margin | Break-even ROAS |
|---|---|
| 80% | 1.25 |
| 60% | 1.67 |
| 50% | 2.00 |
| 40% | 2.50 |
| 25% | 4.00 |

## Make it stricter

Gross margin leaves out costs that also grow with each order. Add them for a truer number:

- Payment gateway fees (Razorpay lists 2% plus GST on domestic cards, UPI and netbanking, checked 2026-10-20)
- Returns and cancelled cash-on-delivery orders
- Discounts and free shipping

If those take another 15% of each sale, your 60% margin becomes 45%, and break-even ROAS rises from 1.67 to 2.22.

## How teams use it

- **Set a target ROAS** a little above break-even, so normal swings do not push you into a loss.
- **Judge new products.** A low-margin product needs a ROAS your ads may never reach.
- **Pick a bid.** Meta's ROAS goal bid strategy takes a number (checked 2026-10-20). Break-even is the lowest goal worth setting.

## FAQ

### Is break-even ROAS the same for every campaign?

The formula is the same, but margin differs by product. A bundle with a higher margin has a lower break-even ROAS than a single discounted item.

### Should I ever run below break-even?

Sometimes. If a first order brings a customer who buys again, the second order pays back the first. Check your repeat purchase rate before you accept a loss on the first sale.

### Where can I calculate it?

Use the free [ROAS calculator](/roas-calculator). Enter your margin and it shows your break-even ROAS. For the basics, start with [what ROAS is](/glossary/roas).

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