Start with contribution before ads
Use average revenue you retain per order after discounts and refunds, excluding sales tax. Include buyer shipping if you receive it. Use matching average costs from the same orders: product cost, fulfillment, payment or marketplace fees, and other variable costs. Do not include advertising in those costs. Do not subtract refunded revenue again as a cost; include any unrecovered return costs separately.
For known-margin mode, enter contribution after all non-ad variable costs, not gross product margin, markup, or net profit margin. The margin and markup tool distinguishes these measures. Our Amazon and eBay profit calculators can help you inspect marketplace costs; leave ads out when preparing the before-ads contribution for this tool.
Break-even ROAS and a target that leaves money after ads
Let R be order revenue and C be contribution before ads. A ROAS of x means modeled ad spend of R ÷ x. At variable-cost break-even, ad spend uses all of C.
Formula
Break-even ROAS = R ÷ C
Target ROAS = R ÷ (C − R × desired share left after ads) · C = R − non-ad variable costs
- Contribution before ads: C = R − non-ad variable costs.
- Break-even ROAS: R ÷ C.
- Target ROAS: R ÷ (C − R × desired share left after ads).
The desired share is a percentage of revenue, not a return on ad spend. Fixed overhead and income tax are excluded. The amount left after ads must still cover those expenses; it is not company net profit.
Worked example: $100 revenue and $60 of costs
At $100 revenue and $60 of non-ad variable costs, contribution is $40. You can spend $40 on ads per order at variable-cost break-even, requiring 2.50x ROAS (250%). To leave 10% of revenue, or $10, after ads, your ad allowance falls to $30. The exact ROAS threshold is 3.333…x; this tool rounds upward to 3.34x (334%). At a tested 4.00x ROAS, estimated ad spend is $25 and contribution after ads is $15, or 15% of revenue.
| Case | ROAS | Ad spend per order | Left after ads |
|---|---|---|---|
| Variable-cost break-even | 2.50x (250%) | $40 | None; ads use all $40 of contribution |
| Target: leave 10% of revenue | 3.34x (334%) | $30 | $10 (10%) |
| Tested 4.00x ROAS | 4.00x | $25 | $15 (15%) |
Rounding and unavailable targets
Money inputs accept cents; percentages and tested ROAS accept two decimals. Known-margin mode rounds the available dollar contribution down to cents. The desired retained amount and tested ad spend round up to cents. Displayed ROAS thresholds round upward to 0.01x so the number does not imply a lower requirement. A 3.33x test in the example does not meet the 10% goal.
If costs consume revenue, there is no positive ad allowance. If your desired retained amount consumes the before-ads contribution, no finite ROAS can meet the goal with positive ad spend. The calculator keeps useful base results when only your goal is unattainable. It does not promise ads will achieve a target.
Compare the same revenue basis
ROAS is a revenue-to-ad-spend ratio, not a net-profit measure. 2.50x equals 250%. Match retained order revenue here to the conversion values in your report. A report including tax, unadjusted refunds, or different attribution windows may not be directly comparable. Repeat customers, future lifetime value, and incrementality are not modeled. Use this for planning; confirm actual performance and books separately.
Google’s Target ROAS documentation explains the ratio and percentage conversion. OpenStax’s contribution margin explanation supports the revenue-minus-variable-cost definition. The break-even and retained-share formulas follow the ad-budget identity above. Sources reviewed October 14, 2026.
Questions sellers ask
How do I calculate break-even ROAS?
Break-even ROAS = R ÷ C, where R is order revenue and C is contribution before ads (revenue minus non-ad variable costs). At $100 revenue and $60 of non-ad variable costs, contribution is $40, so break-even ROAS is 2.50x (250%).
How do I convert ROAS to a percentage?
ROAS is a revenue-to-ad-spend ratio, not a net-profit measure. 2.50x equals 250%.
What if my contribution goal cannot be met?
If costs consume revenue, there is no positive ad allowance. If your desired retained amount consumes the before-ads contribution, no finite ROAS can meet the goal with positive ad spend. The calculator keeps useful base results when only your goal is unattainable. It does not promise ads will achieve a target.
Why might my ad report not match this ROAS?
Match retained order revenue here to the conversion values in your report. A report including tax, unadjusted refunds, or different attribution windows may not be directly comparable. Repeat customers, future lifetime value, and incrementality are not modeled.
Explore more seller tools, or review Taxomate’s supported marketplace accounting workflows for recording actual fees and settlements.