Your break-even ROAS is set by your margin
Most ROAS advice ignores margin. There is no universal good ROAS: the ad dollar spends from the margin pool, not from revenue, so your break-even ROAS is set by your contribution margin. Put your own numbers in and read your real floor.
Revenue per order, before any deductions.
Codes, sitewide offers and markdowns, as a share of order value.
Cost plus freight-in plus duty: the product cost landed at your warehouse, not ex-factory.
Pick/pack plus outbound shipping.
Payment and transaction fees, as a share of order value.
Ads below 2.38x ROAS lose you money on first orders.
Break-even ROAS at your contribution margin ratio, then shifted five and ten points either way. Computed from your inputs, nothing assumed.
The whole method is three lines
Contribution margin is what is left from a sale after the costs that move with that sale are removed. The break-even floor follows directly from it: one over the margin ratio, because every ad dollar has to be paid out of the margin pool.
Same definitions as The Math. Use the margin before marketing, so the ROAS floor covers product, fulfilment and fees; everything above the floor is genuine contribution.
At an average order value of $80.00, each order gives up $4.00 in discounts, $32.00 in landed COGS, $8.00 in shipping and fulfilment, and $2.40 in payment and platform fees.
What is left is $33.60 of contribution per order: 42% of AOV. The ad dollar has to come out of that pool, so the floor is $80.00 ÷ $33.60 = 2.38x. Below 2.38x, every first order that ads buy loses money. Above it, orders start contributing.
These are your live inputs from the calculator above, not a canned example. Change a number up there and this paragraph follows.
Questions operators ask
Because the floor moves with margin. Break-even ROAS is 1 divided by your contribution margin ratio: at a 40% margin the floor is 2.5x, at 25% it is 4.0x, at 70% it is 1.43x. A 4x ROAS on a 25% contribution margin is a slow-motion loss, while a 2.6x ROAS on a 70% margin is a thriving business. Any target quoted without a margin behind it is a guess.
They answer different questions. ROAS is per-channel and platform-reported, so it inherits whatever the platform claims credit for. MER is blended, total revenue over total marketing spend, so no platform can inflate it, but it cannot see an individual campaign. Break-even ROAS is not a performance number at all: it is the floor your margin sets, and the other two only mean something once they are read against it.
This calculator prices the first order. If customers come back, an order bought below first-order break-even can still be worth buying, but only when lifetime value is computed on contribution margin rather than revenue, and you know how long the payback takes. Repeat behaviour varies too much between brands to assume a number here, so we do not.
The margin before marketing: order value minus discounts, landed COGS, shipping and fulfilment, and payment and platform fees, exactly as the calculator steps it down. That way the ROAS floor covers every variable cost of the sale, and everything above the floor is real contribution.
Your real floor, on every order
This page runs one blended average. Blufire computes this per order, customer and SKU, reconciled to your ledger, so a campaign is judged against the margin of what it actually sold, not a store-wide guess.