How Break-Even ROAS Works
In a simplified calculation using contribution margin percentage before advertising, break-even ROAS equals 1 divided by that margin rate. A 25% contribution margin implies a 4.0× break-even ROAS.
A Simple Example
At a 40% contribution margin, $250 of revenue contributes $100 before ad cost. Spending $100 to produce that revenue is a 2.5× break-even ROAS.
Why Break-Even ROAS Matters
It converts unit economics into a practical media-efficiency threshold.
Common Misreading
The answer changes with the costs included. Repeat purchases, fixed costs, agency fees, returns and incrementality can all require a different target than the simplified calculation.