Question 1

What is breakeven ROAS?

Accepted Answer

Breakeven ROAS is the minimum Return on Ad Spend needed to cover all product and overhead costs without making a profit or loss. Formula: Breakeven ROAS = 1 / Gross Margin. If your gross margin is 40%, your breakeven ROAS is 1 / 0.40 = 2.5x.

Question 2

How do I calculate gross margin?

Accepted Answer

Gross Margin = (Selling Price - Cost of Goods Sold) / Selling Price. For example, if you sell a product for $100 and it costs $40 to make, your gross margin is ($100 - $40) / $100 = 60%.

Question 3

How do I use breakeven ROAS in Google Ads?

Accepted Answer

Set your Target ROAS bid strategy in Google Ads to at least your breakeven ROAS. If your breakeven ROAS is 3x, set a target of 3x or higher. Any campaign achieving above breakeven ROAS is contributing to profit.

Question 4

Should I include ad spend in the breakeven ROAS calculation?

Accepted Answer

No — ad spend is already accounted for in the ROAS formula itself (ROAS = Revenue / Ad Spend). The breakeven ROAS calculation uses gross margin (price minus COGS and overhead), not ad spend.

⚖️ Breakeven ROAS Calculator

What is Breakeven ROAS?