--- title: "Break-even ROAS: definition, formula and example" description: "The return on ad spend at which an order's margin exactly pays for the ads that won it: one divided by the contribution margin ratio." url: https://offersuite.io/glossary/break-even-roas updated: 2026-10-13 --- # Break-even ROAS The return on ad spend at which an order's margin exactly pays for the ads that won it: one divided by the contribution margin ratio. ## In plain words Break-even ROAS is the return on ad spend at which advertising neither earns nor loses. At that point the margin on the orders the ads produced equals what the ads cost. It is set by the offer. An order that keeps half its revenue breaks even at a ROAS of 2. One that keeps a quarter needs 4. So every discount, gift and free-shipping rule raises the ROAS a campaign must reach. Margin given away to win the order is margin that can no longer pay for the click. ## Formula - Break-even ROAS = 1 ÷ contribution margin ratio - The same thing: order revenue ÷ the order's contribution margin ## Worked example The $40.00 coffee bag keeps 38.4% of its revenue. The engine's ceiling for acquiring that order is $15.36, its whole margin, which is a ROAS of 2.60. Put the bag on sale at 20% off and the order keeps 25.0% of $32.00. The same campaign now has to reach a ROAS of 4.01 just to break even. ### The example order A $40.00 bag of coffee, shipped free, every cost counted Revenue $40.00 to contribution margin $15.36 (38.4%) Revenue $40.00 Cost of goods −$12.00 Pick and pack −$1.18 Packaging −$0.50 Shipping label −$7.50 Card fee per order −$0.30 Refunds −$2.00 Card processing −$1.16 Contribution margin $15.36 2 declared kinds cost nothing on this option Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost. ## Break-even on the first order is not break-even on the customer This figure treats the order as the whole relationship. For a subscription or a product people reorder, later orders also repay the ads, so a campaign below first-order break-even can still be worth running. That case needs lifetime value and a payback period. The break-even ROAS is the first-order figure only. ## Using it Work it out per offer, at the price customers really pay after discounts. Give each campaign the figure for the offer it sells. When an offer changes, the break-even changes with it: a sale that lifts conversion also lifts the ROAS the ads must clear, and the two can cancel out. ## Related - [Glossary **Glossary of offer economics** The terms behind offer profit, defined plainly with their formulas and a worked number: contribution margin, profit per visitor, break-even lift and more.](https://offersuite.io/glossary) - [Calculator **Offer option calculator: profit per visitor** Compare up to three offer options on profit per visitor, margin per order times conversion, and see the conversion lift each one needs to match the best.](https://offersuite.io/calculators/offer-option-profit-per-visitor) - [Calculator **Bundle pricing calculator: shipping, subscriptions** Price a bundle against a single unit, one-time and subscribed, with the shipping and pick costs it saves, and the conversion it can lose and still earn as much.](https://offersuite.io/calculators/bundle-pricing) - [Glossary **Return on ad spend (ROAS): definition and formula** Revenue attributed to advertising divided by what the advertising cost. A revenue ratio: it says nothing about whether the orders made money.](https://offersuite.io/glossary/return-on-ad-spend) - [Glossary **Contribution margin ratio: definition and formula** Contribution margin as a share of revenue. It says how much of each dollar of sales an order keeps, and how fast a discount eats it.](https://offersuite.io/glossary/contribution-margin-ratio) - [Glossary **Allowable CAC: definition, formula and example** The most you can pay to acquire a customer and still be paid back by a chosen month. A ceiling for the ad account, set by the offer.](https://offersuite.io/glossary/allowable-cac)