Break-even ROAS calculator
The minimum ROAS that keeps you out of losing money on the ad. Set tROAS targets above this.
Inputs
Results
Break-even ROAS = 1 / Gross margin
At this ROAS, gross profit from the ad equals ad spend. Below it, the ad loses money.
Target ROAS = 1.2 / Gross margin
Setting tROAS to this makes the bidder aim for 20% profit per ad dollar.
Target ROAS = 1.5 / Gross margin
More aggressive profit target. Tighter scaling.
Why this calculator is verified
This is a mathematical identity, not a model. If your gross margin is 30%, every $1 of revenue produces $0.30 of gross profit. To break even on $1 of ad spend you need that ad to produce $1 / 0.30 = $3.33 of revenue. Google's Smart Bidding documentation describes target ROAS as an inverse of the desired profit margin, which is the same math from a different direction.
Worked example
30% gross margin
Break-even ROAS = 1 / 0.30 = 3.33. Below 3.33x ROAS, every ad dollar is losing money on the unit. To make 20% profit on the ad (POAS 1.2), set tROAS to 4.0. To make 50% profit on the ad (POAS 1.5), set tROAS to 5.0. Most agency dashboards report ROAS in a vacuum and don't tell you where break-even is for your specific margin.
Sources for the formula
- Google Ads, target ROAS bidding
Authoritative spec for the bidding strategy this calc feeds.
- Google Ads, Smart Bidding overview
How target ROAS interacts with conversion values.
- Harvard Business Review, customer profitability fundamentals
Framing for why margin-based targets compound and revenue-based targets don't.
Related on Ad-Lab
Want this run on your real account?
Free 15-minute audit. We screen-share your Google Ads + GA4 + Shopify, run every number above against the real data, and leave you the audit doc whether you become a client or not.
Book the call