How do you calculate break-even ROAS for an ecommerce brand?

Why does break-even ROAS matter?

Because ROAS on its own says nothing about whether ads make money. A ROAS of 2 means £2 of revenue for every £1 spent, and at a 40% margin that £2 brings in only 80p of margin. Break-even ROAS turns your margin into the line your ads have to clear. The usual formula stops at the first order. This calculator also counts what new customers spend in their first 12 months, because repeat orders change what you can afford to pay for a customer, and repeat orders are what Everboost works on.

Calculate your break-even ROAS

Every field starts empty, and the note under each one says where the number usually comes from. The first two fields give first-order break-even ROAS. The optional repeat fields add a 12-month figure.

The 12-month figure assumes ROAS is measured on first-order revenue from new customers. Repeat orders arrive over the year, so it tells you what you can afford to pay, not when the cash comes back. Take off any discounts or ad spend used to win the repeat orders, or the 12-month figure will look better than it is.

What is ROAS?

ROAS (return on ad spend) is the revenue an ad brings in for every unit of currency spent on it. ROAS = revenue from ads / ad spend. £10,000 of revenue from £4,000 of ad spend is a ROAS of 2.5, also written 2.5x or 250%. ROAS counts revenue, not profit, so a ROAS above 1 can still lose money once product, shipping and payment costs are paid.

How do you calculate break-even ROAS?

Break-even ROAS = 1 / margin, where margin is the share of the order left after product, shipping and payment costs, written as a decimal.

Worked example, as of November 2026:

Step	Calculation	Result
First order value, after discounts		£50
Margin after product, shipping and payment costs		40%
First-order margin	£50 x 40%	£20
Break-even ROAS on the first order	1 / 0.40	2.5
New customers who order again within 12 months		30%
Extra orders per repeat customer in 12 months		1.5
Repeat margin per new customer	30% x 1.5 x £50 x 40%	£9
12-month margin per new customer	£20 + £9	£29
Break-even ROAS with 12 months of repeat orders	£50 / £29	about 1.72

At a current ROAS of 2.0 on new customers, the brand pays £25 in ads for each new customer (£50 / 2). That is £5 more than the £20 first-order margin, so it loses money on day one, and £4 less than the £29 the customer brings in over 12 months, so it earns the spend back within the year.

How do repeat orders change break-even ROAS?

The first-order formula treats every customer as if they never come back. For a brand whose customers reorder, that sets the bar too high and can lead to cutting ads that are working. Counting 12 months of repeat orders lowers the ROAS you need, because each new customer is worth more than their first order.

It works in both directions. A brand where few customers reorder gets little help from the 12-month figure and has to clear something close to first-order break-even. Every extra repeat order lowers the line, which is why a higher repeat rate lets a brand spend more on acquisition and still earn it back. Our customer lifetime value calculator uses the same inputs, and our customer acquisition cost calculator compares what you pay per customer with what they are worth.

Use a repeat rate measured on customers who have had a full 12 months, not last month’s new customers.

What is a good ROAS?

Any ROAS above your break-even ROAS. We have not found a reliable universal benchmark, and the right number depends on margin.

Margin after product, shipping and payment costs	Break-even ROAS on the first order
25%	4.0
33%	about 3.03
40%	2.5
50%	2.0
60%	about 1.67
70%	about 1.43

A brand with a 70% margin can make money on the first order at a ROAS that would lose money for a brand with a 40% margin. Comparing your ROAS with someone else’s tells you little until you know both margins.

Why does platform ROAS look better than it is?

Ad platforms report ROAS on the revenue they credit to their own ads. That can include orders from existing customers who would have bought anyway, and each platform uses its own attribution rules, so more than one can claim the same sale and the total credited can be more than the brand actually took. For a break-even check, compare break-even ROAS with ROAS on new customers’ revenue, measured against your own count of first-time customers. Google Ads lets advertisers set a target ROAS for bidding. It counts returning customers’ purchases unless you use its new customer acquisition goal, so set it above your new-customer break-even line, not at it.

MER (marketing efficiency ratio, also called blended ROAS) divides all revenue by all marketing spend. MER above 1 / margin means total margin covers total marketing spend, a useful whole-business check. It cannot tell you whether new-customer ads pay back, because returning customers’ orders are in it.

How do you lower the ROAS you need?

1. Raise first-order margin. A deep welcome discount lowers margin on the first order and raises break-even ROAS. At a 40% margin before a discount, a £50 order carries £30 of costs; a 20% discount leaves £40 of revenue and roughly £10 of margin, a 25% margin and a break-even ROAS of 4.0.
2. Raise first order value. This does not change break-even ROAS, which depends on margin, but at the same cost per new customer it raises the ROAS you achieve, so more of your spend clears the line.
3. Bring more new customers back. Every extra repeat order within 12 months lowers 12-month break-even ROAS, so the same ad spend pays back. This is where a retention agency comes in.

To see what more repeat orders did for one brand, read the Salt Grooming case study, where returning customer sales grew 58% in 12 months. If you would like a retention agency to work out how far repeat orders could lower your break-even ROAS, book an intro call.