What is break-even ROAS?

Break-even ROAS is the return on ad spend at which revenue exactly covers product costs, fees, ad spend and overheads. Below it you lose money, above it you profit. It is not one number: it depends on how much you spend, because fixed costs are spread over whatever revenue you generate.

Why does break-even ROAS change with ad spend?

Rent, software and salaries stay the same whether you spend 10,000 or 20,000 a month. At a low ad spend those fixed costs are spread over a small amount of revenue, so each dirham of spend has to work harder and break-even ROAS is higher. As spend grows the fixed costs are amortised over more revenue and break-even ROAS falls toward your contribution-margin floor.

How do I calculate break-even ROAS?

Break-even ROAS at a given monthly ad spend = (ad spend + fixed costs) divided by (ad spend x contribution margin %). Contribution margin % is the share of every sale left after cost of goods, shipping, payment processing and returns.

CPP is cost per purchase: ad spend divided by the number of orders it produced. It is the same information as ROAS seen from the other side, since CPP equals average order value divided by ROAS.

Know the ROAS you actually need.

Put in your real costs and this draws the line your ads have to clear, then shows you exactly where today's campaign sits against it.

Your ROAS chart

Every point is a combination of ad spend and ROAS. The line is break-even: above it you make money, below it you burn it.

2 Your ads results Plot your months, year by year

Fill in the months you have. Each becomes a point on the chart, joined in order. Leave a month blank to skip it. Add a year to keep going. A cost you change in one month is added to the months after it as well, and you can untick any month you want left out.

Business

Year

Month	Ad spend	ROAS	Profit	That month was different
Jan	AED	x	-	Tick anything that was different in Jan. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Feb	AED	x	-	Tick anything that was different in Feb. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Mar	AED	x	-	Tick anything that was different in Mar. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Apr	AED	x	-	Tick anything that was different in Apr. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
May	AED	x	-	Tick anything that was different in May. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Jun	AED	x	-	Tick anything that was different in Jun. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Jul	AED	x	-	Tick anything that was different in Jul. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Aug	AED	x	-	Tick anything that was different in Aug. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Sep	AED	x	-	Tick anything that was different in Sep. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Oct	AED	x	-	Tick anything that was different in Oct. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Nov	AED	x	-	Tick anything that was different in Nov. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED
Dec	AED	x	-	Tick anything that was different in Dec. A change here is added to the months after it too, and you can untick any of them. Average order value AED Gross margin % AED Shipping & fulfilment AED Payment processing % Refund / return rate % AED Media-buying fee % Salaries & marketing agency / mo AED Rent, software & other / mo AED

Add 5% VAT on ad spend Extra transaction fee %

VAT is charged on what you pay the ad platforms, so it is treated as a cost of every dirham of spend. It applies to the chart, the months and the scenario alike.

Hover or drag across the chart to read any point · click to drop a scenario point

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