# Break-even ROAS

> The ROAS at which ad revenue exactly covers the ad spend and the cost of the goods sold: 1 ÷ gross margin.

Source: https://datacenter.so/glossary/break-even-roas
Also called: breakeven ROAS, minimum ROAS.

Break-even ROAS = 1 ÷ gross margin, with the margin as a decimal. Gross margin is what is left of the price after the cost of the product, shipping and payment fees.

| Gross margin | Break-even ROAS |
|---|---|
| 25% | 4.0 |
| 40% | 2.5 |
| 60% | 1.67 |
| 75% | 1.33 |

Example: a $100 product that costs $60 to make, ship and take payment for has a 40 percent margin. Ads must bring at least $2.50 of revenue for each $1 spent to break even on the first order.

Running below break-even can still pay when customers buy again: an ad that brings a buyer worth three orders a year earns its cost back over the year, not on day one. Use your real repeat rate and [lifetime value](https://datacenter.so/glossary/ltv), not a hoped-for one. Compare break-even with [blended ROAS](https://datacenter.so/glossary/blended-roas), which counts each sale once. See [ROAS, blended ROAS and MER](https://datacenter.so/guides/roas-mer-blended-roas), and [break-even ROAS and target MER](https://datacenter.so/guides/break-even-roas-and-target-mer) for fixed costs and a profit target.

## Related terms

- https://datacenter.so/glossary/roas
- https://datacenter.so/glossary/blended-roas
- https://datacenter.so/glossary/ltv