Ad Spend Break-Even Calculator
Calculate your break-even ROAS, CPA, and required sales to be profitable. Essential tool for Facebook, Google, and TikTok advertisers.
Ad Spend
Conversion Metrics
Product Costs
Net Loss
-$0.00
Break-Even Analysis
Common ROAS Targets:
- 2x: $2 revenue for every $1 spent (minimum viable)
- 3x: Good for most e-commerce businesses
- 4x+: Excellent - scale aggressively
Related Calculators
About This Calculator
The Ad Spend Break-Even Calculator determines the exact return on ad spend (ROAS) you need to generate before your advertising campaigns become profitable. With advertising costs increasing 12.88% year-over-year in 2025 and the average Google Ads CPC now at $5.26, understanding your break-even point is more critical than ever (WordStream). This calculator analyzes your product margins, conversion rates, and advertising costs to reveal whether your Facebook, Google, TikTok, or Amazon campaigns are truly generating profit—or just revenue that doesn't cover costs. Stop guessing at ROAS targets and start calculating exactly what you need to break even and scale profitably.
How to Use the Ad Spend Break-Even Calculator
- 1Enter your product selling price and cost of goods sold (COGS) to establish your profit margin per unit.
- 2Add variable costs per sale: payment processing (typically 2.9% + $0.30), shipping if you cover it, and expected return rate.
- 3Select your advertising pricing model: CPC (cost per click), CPM (cost per 1,000 impressions), or CPA (cost per acquisition).
- 4Input your actual or expected conversion rate from click to purchase—use industry benchmarks if testing new campaigns.
- 5Enter your current or planned CPC/CPM/CPA based on platform and industry benchmarks.
- 6Review your break-even ROAS—this is the minimum return needed before any dollar becomes profit.
- 7Compare your actual or projected ROAS against break-even to determine true campaign profitability.
Understanding Break-Even ROAS
Break-even ROAS is the most important metric in paid advertising—yet most advertisers don't calculate it correctly.
The Core Formulas:
Profit Per Unit = Selling Price - COGS - Variable Costs
Break-Even ROAS = Selling Price / Profit Per Unit
Complete Break-Even Calculation Example:
| Component | Amount |
|---|---|
| Selling Price | $100.00 |
| COGS (Product Cost) | -$35.00 |
| Shipping | -$8.00 |
| Payment Processing (3%) | -$3.00 |
| Returns Allowance (5%) | -$5.00 |
| Profit Per Unit | $49.00 |
| Break-Even ROAS | $100 / $49 = 2.04x |
What This Means:
- Below 2.04x ROAS: Losing money on every sale
- At 2.04x ROAS: Breaking even (covering ad costs only)
- Above 2.04x ROAS: Profitable advertising
- At 4.0x ROAS: $0.49 profit per $1 in ad spend
Common Mistake: Many advertisers calculate break-even using only COGS: $100 / $65 = 1.54x. This ignores $16 in variable costs, making them think they're profitable at 2.0x ROAS when they're actually losing $0.02 per dollar spent.
2025-2026 CPC Benchmarks by Platform
Advertising costs vary dramatically by platform. Here are current benchmarks:
Platform CPC Comparison (WordStream, Business of Apps):
| Platform | Avg CPC | YoY Change | Best For |
|---|---|---|---|
| LinkedIn Ads | $5.58 | +8% | B2B, high-ticket |
| Google Search | $5.26 | +12.88% | High intent |
| Google Display | $0.63 | +5% | Awareness |
| Facebook/Meta | $0.70-1.12 | -18% | DTC, e-commerce |
| $0.80-1.20 | -10% | Visual products | |
| TikTok | $0.50-1.00 | +15% | Gen Z, viral |
| Amazon Ads | $0.91 | +7% | Product search |
| Twitter/X | $0.38 | -20% | News, engagement |
| $0.50-1.50 | +5% | DIY, decor, fashion |
Google Ads CPC by Industry (2025):
| Industry | Avg CPC | Break-Even Impact |
|---|---|---|
| Legal Services | $8.58 | Need $800+ cases |
| Dental/Home Services | $7.85 | Need $350+ jobs |
| Education | $6.23 | Need high LTV |
| Real Estate | $4.50 | Commission-based |
| E-commerce | $2.50-4.00 | Margin dependent |
| Arts & Entertainment | $1.60 | Lowest barrier |
| Travel | $2.12 | Volume-based |
| Restaurants | $2.05 | Local focus |
Facebook Ads CPC by Industry:
| Industry | CPC | Notes |
|---|---|---|
| Finance & Insurance | $3.77 | Highest CPC |
| Personal Services | $1.00 | Above average |
| Home Improvement | $0.99 | Competitive |
| Apparel | $0.45 | Very efficient |
| Shopping/Gifts | $0.34 | Lowest CPC |
| Sports/Recreation | $0.41 | Good opportunity |
ROAS Benchmarks by Platform and Industry
What ROAS should you target? It depends on your break-even and platform.
Platform ROAS Benchmarks (2025):
| Platform | Avg ROAS | Top 25% | Notes |
|---|---|---|---|
| Google Shopping | 4.0x | 8.0x+ | Best for product search |
| Amazon Ads | 4.0x | 7.0x+ | Buyers already shopping |
| Google Search | 2.0x | 4.0x+ | High intent, competitive |
| Facebook/Instagram | 2.5x | 5.0x+ | Great for scaling |
| TikTok | 2.0x | 4.0x+ | Lower CPM, newer |
| 2.5x | 5.0x+ | Visual products win |
Industry ROAS Benchmarks:
| Industry | Avg ROAS | Good ROAS | Excellent |
|---|---|---|---|
| E-commerce (Apparel) | 3-4x | 5x | 7x+ |
| E-commerce (Electronics) | 2-3x | 4x | 6x+ |
| DTC Brands | 2.5-3.5x | 4x | 6x+ |
| Lead Gen/SaaS | 3-5x | 6x | 10x+ |
| Info Products | 5-10x | 12x | 20x+ |
| Luxury Goods | 2-3x | 4x | 5x+ |
| CPG/Consumables | 3-5x | 6x | 8x+ |
The Break-Even Context: These benchmarks are meaningless without your break-even:
- 3x ROAS with 2.5x break-even = 20% profit margin on ad spend
- 3x ROAS with 2.0x break-even = 50% profit margin on ad spend
- 3x ROAS with 3.2x break-even = LOSING money
Setting Target ROAS:
Target ROAS = Break-Even ROAS × (1 + Desired Profit Margin)
Example: 2.0x break-even × 1.5 (50% profit) = 3.0x target
CPC vs CPM vs CPA: Choosing the Right Model
Each pricing model has strategic implications for break-even analysis:
CPC (Cost Per Click)
| Pros | Cons |
|---|---|
| Pay only for engagement | Click fraud risk |
| Easy to calculate CAC | Quality varies |
| Good for direct response | Can be expensive |
Clicks = Ad Spend / CPC
Conversions = Clicks × Conversion Rate
CAC = CPC / Conversion Rate
Example: $2.00 CPC, 3% conversion rate
- CAC = $2.00 / 0.03 = $66.67 per customer
- Need $67+ profit margin to break even
CPM (Cost Per Thousand Impressions)
| Pros | Cons |
|---|---|
| Great for awareness | No performance guarantee |
| Predictable reach costs | CTR varies widely |
| Works for video/brand | Hard to optimize |
Impressions = (Ad Spend / CPM) × 1,000
Clicks = Impressions × CTR
CAC = CPM / (CTR × Conversion Rate × 1,000)
Example: $10 CPM, 1% CTR, 3% conversion
- 1,000 impressions → 10 clicks → 0.3 conversions
- CAC = $10 / 0.3 = $33.33 per customer
CPA (Cost Per Acquisition)
| Pros | Cons |
|---|---|
| Zero wasted spend | Limited scale |
| Predictable CAC | Requires conversion data |
| Platforms optimize for you | Less control |
Conversions = Ad Spend / CPA
Break-Even CPA = Profit Per Unit
When to Use Each:
- CPC: New campaigns, testing, direct response
- CPM: Brand awareness, retargeting, video
- CPA: Proven campaigns, scaling, lead gen
Scaling: The Diminishing Returns Reality
Every advertiser faces diminishing returns when scaling. Here's what to expect:
The Scaling Curve:
| Monthly Spend | Typical ROAS Decline | Why |
|---|---|---|
| $0-$1,000 | Baseline (best ROAS) | Warmest audiences |
| $1,000-$5,000 | -10 to -15% | Expanding reach |
| $5,000-$20,000 | -15 to -25% | Colder audiences |
| $20,000-$50,000 | -25 to -35% | Broader targeting |
| $50,000+ | -30 to -45% | Market saturation |
Example at 3.5x Starting ROAS:
| Budget | ROAS | Revenue | Profit (2x BE) |
|---|---|---|---|
| $5K | 3.5x | $17,500 | $7,500 |
| $20K | 2.9x | $58,000 | $18,000 |
| $50K | 2.5x | $125,000 | $25,000 |
| $100K | 2.2x | $220,000 | $20,000 |
Notice: $100K spend generates less profit than $50K due to diminishing returns.
Scaling Rules:
- 20% Rule: Increase budget max 20% every 3-5 days
- ROAS Floor: Stop scaling when ROAS drops below 1.3x break-even
- Creative Refresh: New ads every 2-4 weeks at scale
- Audience Expansion: Broader targeting as budget grows
- Frequency Cap: Watch for fatigue above 3-4 frequency
When to Scale:
| Metric | Green Light | Caution | Stop |
|---|---|---|---|
| ROAS vs Break-Even | >1.5x | 1.2-1.5x | <1.2x |
| CPA vs Target | <80% | 80-100% | >100% |
| Frequency | <3 | 3-5 | >5 |
| CTR Trend | Stable/Up | -10% | -20%+ |
Hidden Costs That Kill Profitability
Most advertisers underestimate true costs by 15-25%. Account for these:
Commonly Forgotten Costs:
| Cost Category | Typical Impact | How to Calculate |
|---|---|---|
| Payment Processing | 2.9% + $0.30 | AOV × 0.029 + $0.30 |
| Chargebacks | 0.5-1% | Revenue × 0.01 |
| Returns | 10-30% (apparel) | Sales × Return Rate × Handling |
| Return Shipping | $5-12 per return | Returns × Ship Cost |
| Shipping Overruns | 5-10% | Actual vs Estimated Ship |
| Platform Fees | 15-40% (marketplaces) | Revenue × Fee Rate |
| Fraud | 1-2% | Revenue × Fraud Rate |
True Margin Example (Fashion E-commerce):
| Item | Amount |
|---|---|
| Selling Price | $80.00 |
| COGS | -$24.00 |
| Shipping to Customer | -$7.00 |
| Payment Processing (3%) | -$2.40 |
| Returns (25% × $80 × 0.3 loss) | -$6.00 |
| Chargebacks (0.5%) | -$0.40 |
| True Profit Per Sale | $40.20 |
| Break-Even ROAS | $80 / $40.20 = 1.99x |
Platform-Specific Fees:
| Platform | Additional Fees |
|---|---|
| Amazon FBA | 15-45% (referral + FBA) |
| Shopify | 0.5-2% (payment processing extra) |
| Etsy | 12-18% (listing + transaction + ads) |
| eBay | 13.25% + payment processing |
Impact on Break-Even: Adding just 5% in forgotten costs can shift break-even from 2.0x to 2.2x—turning a "profitable" 2.1x ROAS campaign into a money loser.
Multi-Channel Attribution and Blended ROAS
Understanding how channels work together is critical for accurate break-even analysis.
The Attribution Problem:
| Attribution Model | What It Measures | Bias |
|---|---|---|
| Last Click | Final touchpoint | Over-credits Search, Email |
| First Click | Discovery channel | Over-credits Social, Display |
| Linear | Equal credit to all | Ignores influence weight |
| Time Decay | More credit to recent | Under-values awareness |
| Data-Driven | ML-based weighting | Black box, needs data |
Why This Matters:
- Google Search may show 4x ROAS (last-click)
- But Facebook drove the awareness (first-click)
- Kill Facebook → Google ROAS drops to 2x
- Neither platform tells the full story
Blended ROAS Calculation:
Blended ROAS = Total Revenue / Total Ad Spend (all channels)
Example Multi-Channel Analysis:
| Channel | Spend | Revenue (Last-Click) | ROAS |
|---|---|---|---|
| $10,000 | $25,000 | 2.5x | |
| Google Search | $5,000 | $30,000 | 6.0x |
| Google Shopping | $5,000 | $20,000 | 4.0x |
| Total | $20,000 | $75,000 | 3.75x |
Blended vs Channel ROAS:
- Focus on blended ROAS for profitability decisions
- Use channel ROAS for optimization within each platform
- Test incrementality before cutting "low ROAS" channels
The 60/20/20 Framework:
- 60% budget to proven, profitable channels
- 20% to testing new channels/audiences
- 20% to brand/awareness (harder to measure)
Pro Tips
- 💡Calculate break-even ROAS before launching any campaign—not after. Use it to set targets, not to rationalize results.
- 💡Include payment processing (2.9% + $0.30), shipping, and return costs in your break-even calculation. Missing these can make losses look like profits.
- 💡Set target ROAS at 1.3-1.5x your break-even to cover overhead and generate real profit, not just break-even.
- 💡Recalculate break-even quarterly. With CPC rising 12.88% annually, last year's targets may now be unprofitable.
- 💡Use blended ROAS (total revenue / total ad spend) for profitability decisions. Channel-specific ROAS has attribution bias.
- 💡Expect ROAS to decline 10-20% as you scale. Plan for this—don't scale past the point where ROAS drops below 1.2x break-even.
- 💡Test CPA bidding once you have 30+ conversions per campaign. Platforms often optimize better than manual CPC bidding.
- 💡Account for LTV in break-even for repeat-purchase businesses. A negative first-order ROAS can still be profitable long-term.
- 💡Fresh creative every 2-4 weeks at scale combats audience fatigue and maintains ROAS as you grow.
- 💡Track incrementality before cutting "low ROAS" channels. Awareness channels often drive conversions attributed elsewhere.
Frequently Asked Questions
A "good" ROAS depends entirely on your profit margins and break-even point—not industry averages. For most e-commerce businesses, 3-4x ROAS is considered healthy, but you must calculate your specific break-even first. If your product costs are 30% of selling price with 20% variable costs, your break-even is about 2.0x, making 3x very profitable (50% margin on ad spend). If costs are 60%, break-even is 2.5x, making 3x barely profitable (20% margin).
