Anton HoelstadPaid Search Tools

Calculator · Google Ads · Shopping

Break-even ROAS calculator

Work out the ROAS where an order stops paying for its own clicks, the POAS that goes with it, and the highest CPA you can afford. VAT and returns are included, because both move the break-even point and both are easy to forget.

Runs entirely in your browser. No cookies, no tracking, and nothing you type or upload leaves your device.

Your numbers

As Google Ads reports it (conversion value per order).
Only a label. Nothing is converted.
Your country's standard rate, or the rate on what you sell.
Price excl. VAT minus cost of goods, as a share of the price excl. VAT.
Share of revenue that is refunded.
As a ratio: 5 means 500 %. Leave it empty to skip.

Result

The result appears here as you type.

How it's calculated

Net revenue N = order value / (1 + VAT) (or the order value, if it excludes VAT) Kept revenue K = N x (1 - return rate) Gross profit GP = K x gross margin Max CPA = GP Break-even ROAS = order value / GP POAS = GP / ad cost per order POAS at your ROAS = your ROAS / break-even ROAS

What the numbers mean

Break-even ROAS is the ROAS where the gross profit from an order exactly pays for the ads. Below it, every order costs you money. Google Ads takes a target ROAS as a percentage, so a break-even of 3.47 is a target of 347 %.

Max CPA is the most you can pay in ads per order before the order loses money. It's the same line as break-even ROAS, seen from the cost side.

POAS (profit on ad spend) is gross profit divided by ad spend. Break-even POAS is always 1.0, which is the whole point of it: one number that means the same in every account, whatever the margin.

Why the VAT switch matters

If your tag sends order values including VAT, Google Ads reports a ROAS that includes money the business passes on to the tax authorities. At 25 % VAT the reported ROAS is 25 % higher than what the business keeps, so a target worked out from the margin without taking VAT out is set too low.

Assumptions

  • Gross margin is the price excluding VAT minus the cost of goods, as a share of the price excluding VAT. If you want shipping, payment fees and packaging in the calculation, use your contribution margin instead.
  • Returned items go back to stock, so a return costs you the margin on that order, not the goods. Return shipping and handling are not included; lower the margin to account for them.
  • It looks at the first order only. If a customer is worth more to you than their first order, bidding above break-even can be the right call, as long as it's a choice you make on purpose.
  • All amounts are in the currency you type. The calculator doesn't convert anything.