Glossary - Acquisition and attribution
Break-even ROAS
Break-even ROAS is the minimum return on ad spend at which a campaign stops losing money, calculated as 1 divided by contribution margin - the margin left on the sale before marketing cost. Ecommerce operators use it as the profitability floor that every campaign's reported ROAS must clear.
| Contribution margin | The share of revenue left before marketing cost, expressed as a decimal (0.40 for 40%). |
| Which margin line | Use CM2: revenue minus landed COGS, fulfilment, shipping and payment fees. Gross margin overstates the cushion; CM3 already includes marketing and would double-count it. |
Worked example
If the campaign actually runs at 3.0x ($24,000 attributed revenue), it earns $9,600 of margin against $8,000 of spend - $1,600 left after marketing. Below 2.5x, every order loses money.
What is a good break-even ROAS?
Lower is better, because a low floor means more margin headroom - but break-even ROAS is not a benchmark to chase. It is arithmetic that falls out of your own margin structure: at a 25% contribution margin the floor is 4.0x, at 40% it is 2.5x, at 70% it is about 1.43x.
Your floor moves with anything that moves margin: landed COGS, fulfilment and shipping rates, payment fees, discounting and returns. Two campaigns in the same account can have different floors if they sell different products. Compute yours with the free break-even ROAS calculator.
Break-even ROAS vs related metrics
| Metric | What it measures | How it differs from break-even ROAS |
|---|---|---|
| ROAS | Attributed revenue ÷ ad spend for a campaign. | The number judged against this floor - meaningless without it. |
| Contribution margin | The share of each sale left after variable costs. | The input: break-even ROAS is simply its reciprocal. |
| CM1 | Revenue minus landed COGS, the gross-margin rung of the step-down. | Too early in the step-down for this job: it ignores fulfilment and fees, so it understates the floor. |
| POAS | Contribution margin from attributed orders ÷ ad spend. | The same margin logic restated as a ratio where break-even is always 1.0. |
Common mistakes
- Computing the floor on gross margin (CM1). Fulfilment, shipping and payment fees have not been removed yet, so the floor comes out too low.
- Computing it on CM3, which already subtracts marketing - the ad cost gets counted twice.
- Applying one store-average floor to every campaign when campaigns sell different product mixes at different margins.
- Ignoring discounts and returns. The margin that matters is on net revenue, after both.
- Treating the floor as the target. Break-even means zero profit on variable costs - fixed costs still have to be paid from whatever clears it.
FAQ
Divide 1 by your contribution margin before marketing, expressed as a decimal. At a 40% margin, 1 ÷ 0.40 gives a 2.5x floor: below that, campaigns lose money on variable costs.
Contribution margin before marketing (CM2). Gross margin leaves fulfilment, shipping and payment fees in the number, which makes the floor look easier to clear than it really is.
Yes - it moves whenever your margin structure moves. A freight increase, a payment fee change, deeper discounting or a heavier returns period all raise the floor without any change in the ads themselves.
Related
In Blufire, S6 Marketing & Channels tracks CM1-MER per channel and S5 Acquisition & Attribution shows attribution models compared side by side, so the reported number you judge against this floor is stress-tested too.
Updated July 2026