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Break Even ROAS Calculator for D2C Brands
Enter your selling price, product cost, shipping, fees and returns to find the lowest ROAS at which an order still pays for itself. It handles GST inside the price and RTO on COD orders, and shows the break even cost per purchase and the ROAS you need for a profit. It is free, needs no sign up and works in your browser.
Your numbers
What the customer pays for one order
Switch off only if no GST is charged on this sale
What the product in one order costs you
Per order. Paid again when an order comes back
As a share of the selling price
Share of shipped orders that come back
Share of the price you want to keep after ads
Result
Break even ROAS
2.32x
- Break even cost per purchase
- ₹430.97
- Margin before ads
- 43.14%
- ROAS for 10% profit
- 3.02x
- Price after GST
- ₹846.61
Below 2.32x ROAS in Ads Manager, or above ₹430.97 per purchase, each order loses money; aim for 3.02x to keep 10% of the price as profit.
How to use it
- 1
Enter price and costs
Type what the customer pays, what the product costs you, and shipping and packing per order.
- 2
Add GST, fees and returns
Set the GST switch, your gateway or marketplace fee, and the share of shipped orders that come back as returns or RTO.
- 3
Set your ROAS floor
Use the break even ROAS as the lowest number you accept in Ads Manager, and the profit target ROAS as your goal.
How break even ROAS is worked out
Break even ROAS is the ROAS at which ad spend uses up everything an order leaves you, so you neither make nor lose money. It is the selling price divided by what one shipped order contributes before ads.
That contribution is worked out in four steps. First, take GST out of the price if the price includes it: the net price is the price divided by 1 plus the GST rate. Second, only delivered orders pay you, and the delivered share is 1 minus your return and RTO rate. Third, from each delivered order take off the payment or marketplace fee (a share of the full price) and the product cost. Fourth, take off shipping on every shipped order, and again on every order that comes back.
Take a ₹999 serum with 18% GST included, a ₹250 product cost, ₹80 shipping and packing, a 2% gateway fee and 10% of orders returned or refused. The net price is 999 divided by 1.18, about ₹846.61. Delivered orders keep 90% of ₹846.61 minus ₹19.98 in fees, which is ₹743.97. Take off 90% of the product cost, ₹225, and shipping of ₹80 on every order plus ₹8 for returns, ₹88. That leaves ₹430.97 per shipped order, so break even ROAS is 999 divided by 430.97, about 2.32x.
The price stays in with GST because Ads Manager usually reports the purchase value the customer paid, GST included, at the moment of the order and before any returns. That makes the result a number you can compare directly with the ROAS column.
How to use your break even ROAS
Treat break even ROAS as a floor. If a campaign shows a ROAS below it over a fair stretch of time, each sale is costing more in ads than the order earns. Above it, the campaign pays for itself.
The break even cost per purchase says the same thing in rupees. In the example, paying more than about ₹431 in ad spend for each purchase loses money. It is handy when Ads Manager shows cost per result more clearly than ROAS.
Break even is not the goal. Set a profit target, such as 10% of the price, and the calculator shows the ROAS you need to keep it. In the example that is about 3.02x.
What pushes break even ROAS up for Indian brands
Anything that shrinks what an order leaves you raises the ROAS you need. The usual suspects:
- RTO on COD orders: a refused parcel earns nothing but costs shipping both ways. Order confirmation calls or WhatsApp messages, and a small advance on COD, are common ways brands try to cut it.
- GST: with 18% GST inside a ₹999 price, only ₹846.61 is yours. Leave the switch on when the price the customer pays includes GST, as Indian retail prices usually do.
- Gateway and marketplace fees: they are taken from every delivered order, so a higher fee raises the floor.
- Shipping and packing: a heavier box or a costlier courier comes straight out of each order, and you pay it again on returns.
- Price and bundles: a higher price or a two pack spreads shipping over more revenue, which can lower the break even ROAS more than any change to the ads.
What the calculator assumes
Every model simplifies. This one assumes the following, so adjust your inputs if your business works differently:
- One order is one unit at the price you enter. For bundles, enter the bundle price and the cost of everything in it.
- Returned and refused products go back into stock and can be sold again, so you lose the shipping, not the product.
- Fees are paid only on delivered orders, while shipping is paid on every shipped order and again on each one that comes back.
- Fixed costs such as salaries, rent and software are left out. Cover them with your profit target.
- Ads Manager counts the full price, GST included, when the order is placed, so returns do not lower the ROAS it shows.
Questions people ask
What is break even ROAS?
It is the lowest ROAS at which your ads pay for themselves. At that point the ad spend for each order equals what the order leaves you after product cost, GST, shipping, fees and returns. Below it you lose money on every sale.
How do you calculate break even ROAS?
The quick version is 1 divided by your profit margin, so a 40% margin gives 2.5x. For D2C orders it is more accurate to divide the selling price by what each order contributes after GST, product cost, shipping, fees and returns, which is what this calculator does.
Should break even ROAS include GST?
Yes, if your prices include GST. The GST you collect goes to the government, so it is not yours, but Ads Manager still counts it in purchase value. Taking it out of the contribution but leaving it in the price gives a number you can compare directly with Ads Manager.
How do RTO and returns change break even ROAS?
A returned or refused order earns nothing but still costs shipping, often both ways. Ads Manager counted it as a purchase anyway, so a higher RTO rate makes each reported sale worth less and raises your break even ROAS. Enter the share of shipped orders that come back to see by how much.
What is break even CPA?
It is the most you can pay in ad spend for one purchase without losing money, and it equals what one order leaves you before ads. If your cost per purchase in Ads Manager is above it, that campaign loses money on every sale.
Is break even ROAS a good target?
No, it is a floor. At break even you make nothing, so set a profit target and aim for the ROAS the calculator shows for it. Keep the break even number as the point where you pause or fix a campaign.
What if the calculator says the product loses money before ads?
Then the price does not cover product cost, GST, shipping, fees and returns even with no ad spend, so no ROAS can fix it. Raise the price, sell bundles to spread shipping, cut RTO, or find cheaper shipping or production first.