Answers two questions: what ROAS you need to avoid losing money on ads, and whether the campaign you're already running is profitable. Calculate your break-even ROAS, net profit, and the ROI of your advertising.
ROAS (Return On Ad Spend) measures how much revenue each unit of currency you put into ads generates. But a high ROAS doesn't guarantee profit: what matters is whether it beats your break-even ROAS, the point where the margin your sales leave exactly covers the ad spend. This calculator solves that math so you know — before or after launching — your profitability threshold. Budget decisions that move significant money also require attribution, seasonality, and real contribution-margin analysis.
Financial disclaimerIndicative result — not professional financial advice. Consult a specialist before making investment or credit decisions.
The break-even ROAS (how much revenue per dollar of ads you need to avoid losing), your product's contribution margin, the revenue and units the campaign must generate to cover its cost, and — if you enter actual revenue — your actual ROAS, the campaign's net profit, and advertising ROI. It clearly separates planning mode (no revenue yet) from review mode (campaign live).
Who it's for
For e-commerce owners and SMBs spending on Google Ads, Meta, or TikTok who want to know their profitability threshold before scaling. For operating marketing teams that justify budget with numbers, not inflated platform ROAS. For freelancers and agencies who need to explain to a client why a ROAS of 4 can still lose money when the margin is thin.
When to use it
Before launching a campaign, to set the minimum target ROAS your margin allows. After a period closes, to check whether what the platform reported translates into real profit. When comparing two products or two channels, to see which tolerates a lower ROAS without losing. When setting bid caps, so you never pay more than each sale leaves in margin.
When NOT to use it
Don't use the whole catalog's gross margin when ads push SKUs with different margins: calculate per product or per line. Don't blindly trust the ROAS the platform reports — it usually attributes with a last-click bias and inflates the figures. And don't use it as the only metric for subscription or repeat-purchase businesses: there what matters is LTV against CAC, not the ROAS of a single purchase.
What data it needs
Sale price per unit (P)
What you charge the customer for each unit sold through the ad, before tax. It's the base the margin is calculated on.
Variable cost per unit (Cv)
Everything each sold unit costs you: product, shipping, payment and marketplace fees. Don't include ad spend here; it has its own field.
Ad spend (G)
How much you spent — or plan to spend — on ads during the period you measure. It determines how much revenue and how many units are needed to break even.
Revenue attributed to ads (I, optional)
The revenue the campaign generated. Leave it at 0 for planning mode (break-even ROAS only); fill it in to get the actual ROAS, net profit, and advertising ROI.
Formula
Contribution margin % = (Price − Variable cost) / Price. Break-even ROAS = Price / Unit margin = 1 / Margin %. Net profit = Revenue × Margin % − Spend. Break-even units = Spend / Unit margin. Example: price 100, cost 55 (45% margin), spend 5,000, revenue 15,000 → break-even ROAS 2.22, actual ROAS 3.0, and net profit 1,750.
How to interpret the result
Compare your actual ROAS against the break-even one. If it's higher, the campaign leaves margin after paying for the ads and you can scale as long as it stays above the threshold. If it's lower, you're losing money even when the platform shows an apparently good ROAS: the cause is almost always a thin margin or optimistic attribution. The higher your contribution margin, the lower your break-even ROAS and the more campaigns will be profitable.
How this calculator was reviewed
What you'll see, what it prevents, and where you shouldn't trust it
Every flagship calculator ships with the same editorial structure: two hypothetical worked examples with numbers, the errors it helps you avoid, the model's declared limitations, and a visible financial disclaimer. The review is signed and dated.
Hypothetical case·Case A
An e-commerce store sets its target ROAS before scaling on Meta
A store sells a product for $100 with a variable cost of $55 (product, shipping, and fees), a 45% contribution margin. Before raising the budget it calculates its break-even ROAS: 100 / 45 = 2.22×. That means every $1 in ads must bring in at least $2.22 of revenue just to avoid losing money. With a planned spend of $5,000, the campaign needs to generate $11,100 in revenue (about 111 units) to break even. They set their target ROAS at 2.8× to leave a cushion and decide to pause any ad set that drops below 2.22× consistently.
Illustrative figures. This example does not represent a real company or a financial recommendation.
Hypothetical case·Case B
An advertiser finds a reported ROAS of 3.0 is still profitable… but barely
The same store runs the campaign and the platform reports a ROAS of 3.0: it spent $5,000 and attributes $15,000 in revenue. With a 45% margin, net profit is 15,000 × 0.45 − 5,000 = $1,750, and advertising ROI is 1,750 / 5,000 = 35%. It's profitable because 3.0× beats the 2.22× break-even. But if the real margin were 30% instead of 45% (due to discounts or returns), the break-even would rise to 3.33× and that same ROAS of 3.0 would start losing money. The difference between 'profitable' and 'loss' is in the margin, not the reported ROAS.
Illustrative figures. This example does not represent a real company or a financial recommendation.
Common mistakes it helps you avoid
Things a team or decision-maker might assume that this calculator forces you to verify before closing the math.
Optimizing for ROAS while ignoring margin. A ROAS of 4 looks great, but if your contribution margin is 20% (5× break-even) you're losing money on every sale.
Using the whole catalog's gross margin when ads push products with different margins. Calculate the break-even ROAS per SKU or per line, not with an average that hides the products that don't pay.
Trusting the platform-reported ROAS 100%. Last-click attribution overstates the revenue the campaign actually caused; compare against your real sales for the period.
Confusing ROAS with ROI. ROAS uses revenue; ROI uses profit. Reporting 'ROAS 5' as if it were profit inflates the result and leads to scaling campaigns that actually leave no margin.
Model limitations
What the calculator does not do, and where you need a professional or a specialized tool.
It assumes a constant contribution margin per unit. If you have volume discounts, variable returns, or shipping costs that change by region, the real break-even ROAS fluctuates.
It takes the revenue you attribute to ads as true. It doesn't correct platform attribution bias; to isolate the incremental effect you need controlled experiments (holdout, geo-tests).
It measures a single purchase. For subscription or repeat-purchase businesses, what matters is LTV against CAC, not the ROAS of the first transaction.
It doesn't model the time value of money or cash flow. A campaign with a profitable ROAS can still strain your cash if collection is slow; check it in the cash flow simulator.
When NOT to use this calculator
Don't use this calculator as the only metric for subscription, repeat-purchase, or long-LTV businesses: there the right decision compares the customer's lifetime value against the cost to acquire them, not the ROAS of one purchase. Don't use it with margins averaged across the whole catalog when ads concentrate spend on a few products; calculate per SKU. And remember that the platform-reported ROAS is not profit: for significant budget decisions, compare attribution against your real sales and, if the amount warrants it, validate with your finance lead.
Financial, tax, accounting and legal notice
The result is an informative estimate based on the data you enter. It does not constitute financial, tax, accounting, or legal advice. For decisions that affect taxes, financing, or wealth, validate the numbers with a certified professional in your jurisdiction.
Editorial review
Reviewed by the Simúlalo editorial team
This simulator was reviewed by the people listed below before being published. The review covers the declared formula, the model's assumptions, the explicit limitations, and the absence of unsupported financial claims.
They are part of the Simúlalo editorial team, focused on building financial tools that are clear, educational, and easy to interpret.
Last updated: ·We update this page when the methodology, sources used, or simulator structure change.
This tool uses standard financial formulas and user-supplied data. To explain concepts like rates, credit, risk, or cash flow we consult public and official sources (Banxico, SAT, CONDUSEF, CNBV, Banco de España, IFRS, BIS, among others). Simúlalo is not affiliated with, sponsored by, or endorsed by these institutions.
Frequently asked questions — ROAS
1What is a good ROAS?
There's no universal number: a good ROAS is any value above your break-even ROAS. With a 45% contribution margin your break-even is 2.22×, so a ROAS of 3 is already profitable; with a 20% margin the break-even rises to 5×, and that same ROAS of 3 loses money. That's why a generic 'a ROAS of 4 is good' means nothing without knowing your margin.
2How is ROAS calculated?
ROAS = revenue attributed to ads / ad spend. If you spent 5,000 on ads and they generated 15,000 in revenue, your ROAS is 15,000 / 5,000 = 3, i.e. 3× or 300%. It's a revenue multiple, not a profit one: it ignores the cost of the product entirely.
3What is the break-even ROAS?
It's the minimum ROAS at which the campaign neither gains nor loses: the margin the sales leave exactly covers the ad spend. It's calculated as Price / Unit margin, or equivalently 1 / Contribution margin %. Below that point you pay more in ads than you recover in margin; above it, you make a profit.
4What's the difference between ROAS and ROI?
ROAS uses revenue: how much revenue each dollar of ads brought in. ROI uses profit: how much net profit the investment left over its cost. A ROAS of 4 can be a negative ROI if the product's margin is thin, because ROAS doesn't subtract the cost of goods. ROAS is for optimizing campaigns; ROI is for deciding whether the investment was actually worth it.
5What ROAS do I need to be profitable?
Exactly your break-even ROAS: 1 divided by your contribution margin. 50% margin → 2× break-even; 33% margin → 3× break-even; 25% margin → 4× break-even. Any ROAS above that threshold makes a profit; anything below loses money. Raise the price or lower the variable cost and your break-even drops, making more campaigns profitable.
6Why does my campaign lose money if the platform shows a high ROAS?
For two common reasons. First: ROAS doesn't subtract the product cost, so a ROAS of 3 with a 25% margin (4× break-even) loses money. Second: platforms attribute with a last-click bias and tend to overstate the revenue they actually caused. Calculate with your real margin and, if you can, compare the attributed revenue against your actual sales for the period.
What ROAS do I need to break even, and is my current campaign profitable?
Work out the minimum ROAS you need to avoid losing money on ads, and check whether the campaign you're already running is profitable.
Results
Break-even ROAS
2.22×
Contribution margin
45.0%
Revenue to break even
MXN 11,111
Units to break even
111
Actual ROAS
3×
Campaign net profit
MXN 1,750
Advertising ROI
35.0%
Quick read
Break-even:2.22×Actual:3×
Your actual ROAS (3×) beats the break-even (2.22×): the campaign makes margin after paying for the ads. You have room to scale spend as long as ROAS stays above break-even.