What Is Break-Even ROAS?
Also written as BEROAS, break even ROAS, BER.
Definition
Break-even ROAS is the return on ad spend you must hit before a sale makes any profit. You find it by dividing 1 by your gross margin. For an ecommerce store on Google Ads, this number tells you whether a campaign is making money or quietly losing it.
Written by Christopher Krassnig, Founder & CEO of ZenoX Media. Written by the ZenoX team from the accounts we run. Definitions are general; the numbers in examples are maths, not client results.
Break-Even ROAS, Explained
Gross margin is what is left of a sale after the product and shipping are paid, before ads. Write it as a decimal. At a 40 percent margin, 1 divided by 0.4 is 2.5. You need 2.50 in sales for every 1.00 spent on ads just to stand still. At a 70 percent margin, break-even is about 1.4. At a 20 percent margin it is 5.
The usual mistake is copying a public good ROAS number, like 4x, and using it as a target. That number does not know your margin. A 3x return on a fat margin can print cash. A 5x return on a thin margin can still lose money after fees.
Work out break-even before you set any bid target. Do this per product when margins differ a lot, not once for the whole store. Then aim above it by enough to cover apps, staff, and leftover profit. Judge the account on money left, not on the multiple.
How We Use It at ZenoX
We read break-even ROAS before any bid target on the 200+ ecom accounts we run. We split products into champions, potentials, sleepers, and wasters so a thin-margin waster does not set the target for a healthy champion. Feed-only Performance Max starts only after that number is known.
Questions People Ask About Break-Even ROAS
How Do I Calculate Break-even ROAS?
Divide 1 by your gross margin written as a decimal. Gross margin is what is left after product cost and shipping, before ads. A 40 percent margin is 0.4, and 1 divided by 0.4 is 2.5. That means you need 2.50 in sales for every 1.00 of ad spend just to break even.
Is a 4x ROAS Always Profitable?
No. Profit depends on your margin, not on a public benchmark. At a 70 percent margin, break-even is about 1.4, so 4x is healthy. At a 20 percent margin, break-even is 5, so 4x still loses money. Work out your own number before you set a bid target.
Related terms
- ROASROAS (return on ad spend) is ad revenue divided by ad spend.
- Target ROASTarget ROAS is a Google Ads bid strategy that tries to get a return you type in, as a percentage of spend.
- CPACPA (cost per acquisition) is how much ad spend it took to get one sale.
- Average Order ValueAverage order value (AOV) is the typical amount a customer spends in one order.
Go deeper
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