Our approach
ROAS Lab turns unit economics into decision thresholds. We separate net revenue, variable costs and advertising cost so users can see exactly what changes a result. Calculator outputs are estimates based entirely on the inputs supplied by the user; we do not treat platform-attributed revenue as audited business revenue.
Break-even ROAS
Contribution margin before advertising equals net revenue minus product cost, fulfillment, packaging, merchant fees, shipping paid by the business and other order-level costs. If net revenue is $100 and those costs total $60, contribution margin is $40 and break-even ROAS is 2.50x.
Maximum CPA
Maximum break-even CPA equals contribution margin before advertising. A profit target reduces the allowed CPA: maximum target CPA equals contribution margin minus desired profit per acquired customer. The model assumes one conversion represents one acquired customer unless the user intentionally supplies another conversion definition.
Break-even CPC
A $30 maximum CPA and 2.5% conversion rate produce a $0.75 break-even CPC. Conversion rate must be entered as a percentage of relevant paid clicks, not all sessions, when the result is used for campaign bidding.
ROAS and profit
ROAS is attributed revenue divided by ad spend. It is not the same as profit or ROI. Where a calculator estimates profit after advertising, it subtracts user-provided variable costs and ad spend from net revenue. Fixed overhead, tax obligations, financing and payroll are excluded unless explicitly represented in an input.
Returns, discounts and taxes
Use expected net revenue after discounts and refunds. Customer-paid shipping may be included as revenue, while merchant-paid shipping belongs in variable costs. Sales tax or VAT collected for a government should normally be excluded from usable revenue. Treatment varies by jurisdiction, so users should confirm the approach with their accountant.
Rounding and edge cases
Displayed figures may be rounded to two decimal places, while calculations can retain greater precision. Zero or negative contribution margins do not produce a meaningful break-even ROAS because no advertising budget is available. Extremely small samples, unusual promotions and delayed returns can make recent averages unreliable.
How to verify a result
- Reconcile net revenue with store or accounting records.
- Check every cost is expressed for the same average order.
- Use a representative period and separate materially different customer groups.
- Compare platform ROAS with blended revenue and spend.
- Recalculate when pricing, costs or return rates change.
Start with the break-even ROAS calculator, compare the result with the standard ROAS calculator, and read our worked calculation guide.