Ad Spend Tool

Shopify Breakeven ROAS Calculator

Estimate the minimum ROAS you need to cover full order costs and protect margin before scaling campaigns.

Last updated: February 16, 2026

Core output

Breakeven ROAS

Best for

Paid media teams

Refresh cadence

Weekly

Breakeven ROAS formula

Start with contribution margin after COGS, payment fees, shipping, and refunds. Breakeven ROAS is the inverse of that contribution margin ratio.

  • Contribution margin ratio = (Revenue - non-ad costs) / Revenue
  • Breakeven ROAS = 1 / Contribution margin ratio
  • Target ROAS should be above breakeven to leave operating profit
How to use in budget planning

Set a floor ROAS by channel and product group. If live campaign ROAS stays below breakeven, reduce budget, improve conversion rate, or adjust offer economics.

Use separate thresholds for prospecting and retargeting when conversion and margin patterns differ.

Common mistakes

Many stores calculate breakeven ROAS from gross margin only and miss fee and shipping drag.

  • Ignoring variable payment fees on lower AOV orders
  • Using blended COGS that hides high-cost variants
  • Not adjusting for refund and return rates
Frequently asked questions

Is breakeven ROAS the same for every channel?

No. It changes with product mix, discounting, and channel-level conversion behavior.

How often should breakeven ROAS be recalculated?

At least weekly, and immediately when costs or discount strategy changes.

What should my target ROAS be?

Set target ROAS above breakeven by your required operating profit buffer.