Free Tool
Target ROAS Calculatorfor Google Ads.
Enter your revenue, COGS, fees, and ad spend. Get your gross margin, your true break-even ROAS, gross ROAS, POAS, net profit, and the tROAS target to set for Smart Bidding.
Written by Christopher Krassnig, Founder & CEO of ZenoX Media. Built from the break-even maths we run on 200+ ecom accounts.
The short answer
Your break-even ROAS is 1 divided by your gross margin. A 50% margin breaks even at 2x, a 25% margin at 4x. It does not change when your budget changes, because product costs scale with revenue and ad spend does not. ZenoX sets the target 20% above break-even to leave room for bid variance, so a store at 1.9x break-even runs a 2.3x tROAS.
The Math This Tool Runs
- Gross profit =
- revenue - COGS - other costs
- Gross margin =
- gross profit / revenue
- Break-even ROAS =
- 1 / gross margin. Ad spend is not in this formula.
- POAS (profit on ad spend) =
- gross profit / ad spend. Above 1.0 means you made money.
- Recommended tROAS =
- break-even ROAS x 1.2, rounded up to one decimal. The 20% buffer is our rule of thumb, not a Google rule.
Worked example: 20,000 revenue, 8,000 COGS, 1,500 in shipping, returns and fees. Gross profit is 10,500, so the margin is 52.5% and break-even ROAS is 1.90x. Set tROAS at 2.3x. Spend 5,000 against that and you make 4.00x gross ROAS, 2.10x POAS, and 5,500 net profit. Spend 1,000 instead and break-even is still 1.90x, because break-even is a property of your margin, not your budget.
Your break-even ROAS comes from margin alone, so it shows before you fill this in. Ad spend tells you how you are doing against it.
Nothing is stored or sent anywhere. All numbers stay in your browser.
Fill in your numbers to see your ROAS breakdown.
Why the numbers matter
Gross ROAS Is Not Profit
Most accounts optimise to gross ROAS. But gross ROAS ignores your cost of goods, shipping, returns, and platform fees. A 4x gross ROAS on a 50% margin product is profitable. A 4x gross ROAS on a 20% margin product is not.
Break-even ROAS is 1 divided by your gross margin. That is the whole formula. A 50% margin means you break even at 2x. A 25% margin means you break even at 4x. It does not change when you change your budget, because your product costs scale with revenue and your ad spend does not.
The tROAS target you set in Google Ads needs to be above your break-even ROAS or Smart Bidding will buy traffic that costs you money. We set tROAS 20% above break-even to leave room for bid variance. That buffer is our own rule of thumb, not a Google rule.
If your current tROAS target is below the break-even ROAS this tool shows, every conversion Smart Bidding sends you is a loss.
Common questions
Break-Even ROAS, Answered
- How do I calculate break-even ROAS?
- Break-even ROAS is 1 divided by your gross margin rate. Work out your gross margin first: revenue minus cost of goods minus shipping, returns and payment fees, all divided by revenue. Then divide 1 by that number. A 50% margin means you break even at 2x. A 25% margin means you break even at 4x. Your ad spend is not part of this formula, so your break-even does not move when your budget does.
- What tROAS target should I set in Google Ads?
- Set it above your break-even ROAS, never at or below it. ZenoX sets tROAS about 20% above break-even so Smart Bidding has room for bid variance without buying traffic that loses money. On a store with a 52.5% margin, break-even is 1.90x and the target is 2.3x. If your current target sits below your break-even, every conversion Smart Bidding buys you is a loss.
- What is the difference between ROAS and POAS?
- Gross ROAS is revenue divided by ad spend. It ignores what the product cost you, so it tells you nothing about profit. POAS, profit on ad spend, is gross profit divided by ad spend. Anything above 1.0 means the campaign made money. A 4x gross ROAS is excellent on a 50% margin product and a loss on a 20% margin one, which is why POAS is the number worth steering on.
- Does a higher ROAS always mean more profit?
- No. Pushing your target ROAS up usually cuts volume, and past a point you make a higher percentage on far less revenue. The goal is total profit, not the ratio. Once your target clears break-even with a sensible buffer, more profit normally comes from lowering costs or raising margin, not from raising the target further.
- Does this calculator store my numbers?
- No. Everything runs in your browser. Nothing you type is stored, sent, or logged anywhere. There is no login and no email required.
Next steps
More from the ZenoX team.
Drop your store URL on WhatsApp. We pull your actual numbers up on the call and show you exactly where the margin is going.
We work with brands serious about scale. If that is you, let's talk.
