Result
Break-even ad spend
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Break-even ad spend = expected revenue × gross margin ÷ 100 — the entire gross profit from that revenue, spent entirely on ads, at which the campaign's net result is zero. Minimum required ROAS = 100% ÷ gross margin: expresses the same threshold as a ratio of revenue to spend.
If actual ad spend is below the break-even figure, the campaign is profitable; if above, it's a loss, even though revenue itself is positive. That's because part of the revenue always goes to the cost of the goods, not just to advertising.
The lower a product's gross margin, the less room there is for ad spend at the same revenue, and the higher the required ROAS — low-margin categories (e.g. products with a high cost basis) need noticeably more efficient advertising than high-margin ones.