Break-even ROAS: how much can you afford to pay for a sale?

ROAS means return on ad spend: how many dollars of sales you get for each $1 of ads. A ROAS of 3 means $3 of sales for every $1 spent. On its own it tells you very little. What matters is whether that ROAS is above or below your break-even.

The idea in one sentence

Your break-even cost per sale is the most you can spend on ads to get one order and still not lose money on it.

Step 1: work out what you keep from an average order

Start with your average order value (AOV). Then subtract every cost that comes with an order, except ads:

• Product cost (what you paid for the goods)
• Shipping and packaging you pay
• Payment fees
• Any app or platform fees charged per order
• An allowance for returns

What is left is your contribution per order before ads.

Step 2: that is your break-even cost per sale

If you spend exactly that amount on ads to win the order, you make zero profit on it. Spend less and you profit; spend more and you lose money on the first order.

Step 3: turn it into break-even ROAS

Break-even ROAS = average order value ÷ break-even cost per sale.

A worked example with made-up numbers: a store with an AOV of $80 whose product, shipping, fees and returns add up to $48 keeps $32 before ads. Its break-even cost per sale is $32, and its break-even ROAS is 80 ÷ 32 = 2.5. Any campaign running below a ROAS of 2.5 is losing money on the first order.

Why it changes how you run ads

• Scale campaigns that run comfortably under your break-even cost per sale.
• Give new tests a fair chance. Ad platforms need enough sales to learn. Set a test budget you can afford at your break-even, and do not judge it after one or two days.
• Stop or fix campaigns that stay above break-even after a fair test.

What about repeat customers?

If customers come back and buy again, you may choose to pay more than first-order break-even to win them. Do this deliberately, once you know your returning customer rate from real data. Until then, aim to profit on the first order.

Raise the line instead of chasing cheaper clicks

You can raise your break-even by increasing average order value (bundles, a free-shipping threshold), lowering product or shipping costs, or reducing returns. Each one gives your ads more room.

How Helix helps

The Helix profit dashboard works out your break-even cost per sale from your own numbers and shows it next to your actual ad cost per sale every morning. With Meta ads connected, every test is graded against it.

Related: how to scale a DTC brand profitably.