Break-even ROAS table by contribution margin
In the simplified model, break-even ROAS equals one divided by the pre-ad contribution-margin fraction. At a 40% contribution margin, revenue must equal 2.5 times ad spend to cover that spend.
Break-even ROAS table by contribution margin
| Pre-ad contribution margin | Break-even ROAS multiple | Same ROAS as percent | Revenue to cover 100 ad spend |
|---|---|---|---|
| 10.00% | 10.00× | 1000.00% | 1000.00 |
| 20.00% | 5.00× | 500.00% | 500.00 |
| 25.00% | 4.00× | 400.00% | 400.00 |
| 30.00% | 3.33× | 333.33% | 333.33 |
| 40.00% | 2.50× | 250.00% | 250.00 |
| 50.00% | 2.00× | 200.00% | 200.00 |
| 60.00% | 1.67× | 166.67% | 166.67 |
| 75.00% | 1.33× | 133.33% | 133.33 |
| 80.00% | 1.25× | 125.00% | 125.00 |
Formula & method
Contribution after ads = revenue × margin fraction − ad spend
Break-even ROAS = 1 ÷ margin fractionCalculate the contribution margin after the variable costs you intend to include, but before advertising. Setting contribution after ads to zero gives the formula. This contribution break-even point does not cover fixed overhead unless an explicit allowance is included in the input model.
Use the revenue actually relevant to that margin. Taxes collected for another party, refunds, shipping subsidies and payment fees can change the usable contribution. A reported conversion value that differs from collected revenue should not be inserted without adjustment.
Worked example
Revenue of 800 at a 25% pre-ad contribution margin leaves 200 for advertising. Spending 200 produces 4× ROAS and zero contribution after ads; spending 250 produces a contribution loss of 50.
What can change the answer
The margin must be positive; zero or negative contribution cannot fund positive ad spend. The table is a simplified contribution model and excludes unlisted fixed costs and causal attribution questions.
Sources & definitions
Method checked:
Continue with a related task
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ROAS is attributed revenue divided by ad spend. Revenue of 4,500 from spend of 1,500 gives 3× ROAS, equivalent to 300%.
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Gross margin is revenue minus included cost of goods, divided by revenue, multiplied by 100. Revenue of 1,000 and cost of 650 gives a gross profit of 350 and margin of 35%.
Markup Calculator
Markup equals selling price minus cost, divided by cost, multiplied by 100. Buying at 80 and selling at 100 gives a 25% markup, while the margin is 20%.
Target Margin Selling Price Calculator
Required selling price equals unit cost divided by one minus the target-margin fraction. A cost of 60 and a 40% target margin gives a price of 100.