Break-EvenROASCalculator
The minimum ROAS you need before paid traffic starts making money.
After COGS, shipping, returns and payment processing. Typical UK ecommerce range: 18–40%.
Every campaign, ad group and SKU running below 4.00x ROAS is losing money on every sale.
Break-even ROAS by UK ecommerce sector
From our Q1 2026 benchmarks of 75+ UK ecommerce accounts.
| Sector | Avg contribution margin | Break-even ROAS |
|---|---|---|
| Fashion & Apparel | 19% | 5.2x |
| Beauty & Skincare | 32% | 3.1x |
| Home & Furniture | 26% | 3.8x |
| Health Supplements | 36% | 2.8x |
| Pet Supplies | 40% | 2.5x |
| Food & Beverage | 31% | 3.2x |
Source: JudeLuxe Benchmark Report, Q1 2026.
Three worked examples
Three real-shaped accounts at the same headline ROAS, three different profit outcomes.
| Account | Margin | Revenue | Spend | ROAS | Verdict |
|---|---|---|---|---|---|
| Beauty brand | 32% | £60k | £18k | 3.33x | Just above break-even (3.13x). Healthy but no buffer. |
| Furniture retailer | 26% | £120k | £35k | 3.43x | Below break-even (3.85x). Losing roughly £4.5k/month on paid. |
| Pet supplies | 40% | £40k | £12k | 3.33x | Well above break-even (2.50x). Strong contribution. |
From break-even to target ROAS
Break-even is the floor. Target ROAS is the floor plus the contribution your business needs towards overheads, salaries, fixed marketing costs, and reinvestment. For most retained accounts we set target ROAS at 1.3× to 1.6× break-even, depending on growth stage and cash position.
Below 1.3× you have no buffer for a bad week. Above 1.6× you are usually leaving growth on the table - the bidder is being too conservative and competitors are picking up the queries you should be winning.
Five pitfalls to avoid
- 01Using gross margin instead of contribution margin (overstates room to spend by 30–50%)
- 02Forgetting that return rate compounds: 30% returns means 1.43x more spend per kept order
- 03Ignoring CAC payback when running new-customer campaigns
- 04Setting a single account-wide target instead of campaign or product-group targets
- 05Not re-running the calculation after supplier price increases or carrier surcharges
Related concepts
Pair this with the POAS calculator for a profit-side view, the POAS framework for the full method, and the PPC glossary for definitions of contribution margin, CAC payback and target ROAS.
Frequently asked questions
How do you calculate break-even ROAS?
Divide 1 by your average contribution margin percentage. If your margin after COGS, shipping, returns and payment processing is 25%, your break-even ROAS is 1 ÷ 0.25 = 4.0x. Any ROAS below this means every sale loses money, regardless of what the dashboard reports.
What contribution margin should I use?
Use your blended contribution margin after all variable costs: COGS, inbound freight, packaging, shipping to customer, returns and refunds, and payment processing. Do not use gross margin from a product spec sheet.
Why does break-even ROAS vary by sector?
Sectors with high return rates (fashion 28–35%) or low product margins need a much higher ROAS to break even than sectors with low returns and high margins (pet supplies, supplements).
Is break-even ROAS the same as target ROAS?
No. Break-even ROAS is the floor below which every sale loses money. Target ROAS is the floor plus the contribution you need towards fixed costs, marketing overheads and profit. A reasonable rule: target ROAS = break-even ROAS × 1.3 to 1.6, depending on growth stage.
Should I set break-even ROAS at account or campaign level?
Campaign level, minimum. Ideally ad-group or product-group level. Account-wide averages hide the campaigns burning the most money. A Performance Max campaign skewed towards low-margin SKUs can be 50% below the account break-even line while the headline ROAS looks fine.
How does break-even ROAS interact with new-customer vs returning-customer mix?
If you operate a CAC payback model, break-even ROAS on first orders can legitimately sit below 1.0x because lifetime value pays the difference. Without LTV modelling and a defined payback window (usually 6–12 months), do not run below break-even.
What happens to break-even ROAS during a sale or promotion?
It rises. A 20% discount cuts contribution margin roughly in half on most ecommerce P&Ls, which doubles the break-even ROAS for the duration of the promotion. Most accounts forget to recalculate, then wonder why peak-trading weeks lose money.
Above your break-even, but still not profitable?
ROAS hides product-level losses. A profit audit finds them.
Book a profit audit