COGS & Break-even ROAS Calculator

How the break-even calculator works

Break-even ROAS is the return on ad spend where an order stops losing money. The calculator adds up everything one order costs you, product costs, payment fees, VAT, shipping, fulfillment and storage, and compares that total to your average order value.

VAT is treated as included in your gross price, the standard for EU ecommerce. If your AOV is 90 and your rate is 23%, the VAT share is 90 x 23 / 123, about 16.83, not 20.70. Getting this right keeps your break-even target honest instead of inflated.

Whatever is left after costs is your contribution margin. Divide AOV by that profit and you get your break-even ROAS, the floor every campaign has to clear. Your break-even CPA is the same profit number, the most you can pay for an order before it turns unprofitable.

What break-even ROAS tells you

Break-even ROAS is the lowest return on ad spend at which an order pays for its own advertising. Below it, every sale you buy with ads costs you money. Work it out before you set a target ROAS or a cost cap, and again whenever your prices, shipping, suppliers or VAT rate change.

How to use the break-even ROAS calculator

Start with Average Order Value (AOV), the gross amount customers pay including VAT. Results stay empty until it has a value. In COGS input mode, Percentage takes COGS % of AOV and Unit economics takes COGS per unit and Avg units per order (12.50 per unit at 2 units on a 90 AOV is 27.78%). The Find your COGS % box turns one product's price and cost into that percentage.

Then fill in fees, VAT, shipping, fulfillment and storage. Fulfillment is added once per order, so if orders hold several units, enter the cost for the whole order.

Worked example

Example only, not client data: AOV 90, COGS 25%, payment fees 1.5%, VAT 23%, shipping 8, fulfillment 5 and storage 2. COGS comes to 22.50, fees to 1.35 and the VAT inside the price to 16.83, so one order costs 55.68 and leaves 34.32 of profit before ads, a 38.13% margin.

Break-even ROAS is 90 / 34.32 = 2.62x and break-even CPA is 34.32. At a 3x ROAS you spend 30 on ads per order and keep 4.32. At 2x you spend 45 and lose 10.68.

How to read the result

Break-even ROAS equals 1 divided by your margin, so a 50% margin needs 2.00x and a 25% margin needs 4.00x. On thin margins small costs move it a lot: 3 more in shipping in the example above lifts it to 2.87x.

If costs meet or exceed AOV, the calculator shows Unreachable instead of a ROAS, because better ads can't fix an order that loses money before any ad spend. To see how much profit sits above the break-even line at different budgets, use the Target ROAS Matrix.

Mistakes that skew break-even ROAS

Entering a net AOV together with a VAT rate takes VAT out twice and inflates the result, so set VAT % to 0 if your AOV already excludes VAT. Leaving out fees, shipping or storage does the opposite. Break-even then looks lower than it is, and campaigns that seem profitable lose money. Break-even is the zero line, not a target: at exactly 2.62x the example store earns nothing on its orders.

Break-even ROAS Calculator FAQ