Should I include shipping revenue in AOV?

Yes. AOV in this calculator means gross order value: item price plus any shipping you charge the customer. If you offer free shipping, enter only the item price. The shipping cost input is what you pay the carrier, not what you charge.

Does this account for returns?

Not directly. If your return rate is meaningful (over 8 percent for apparel, over 5 percent for most other categories), multiply your break-even ROAS by 1 divided by (1 minus return rate). A 10 percent return rate pushes a 2.5x break-even up to 2.78x real break-even.

Why is my actual ROAS higher than break-even but I'm still losing money?

Two likely reasons. First, platform ROAS uses 7-day-click 1-day-view attribution, which overstates. Check your post-purchase survey attribution or MMM if you have one. Second, you might be paying other fixed costs the calculator doesn't see: software, contractors, rent. This calculator finds break-even on a per-order basis. You still need volume to cover fixed costs.

Is MER the same as ROAS?

Blended MER (Marketing Efficiency Ratio) divides total revenue by total marketing spend across all paid channels. ROAS is platform-specific. MER is more honest for decision-making because it catches organic spillover. Aim to understand both.

Ad Performance · Free Tool

Break-Even ROAS Calculator

Find the minimum return on ad spend your campaigns need just to cover costs. Every ROAS above this number is profit. Every ROAS below it is bleeding cash.

Break-Even ROAS = AOV ÷ (AOV − COGS − Shipping − Fees − Target Profit)

Average order value ($)

Cost of goods per order ($)

Shipping cost per order ($)

Payment + transaction fees (%)

Target net margin (%)

From MagicFit

Hitting your ROAS target starts with ads that convert

Break-even is a floor, not a ceiling. The brands clearing it consistently ship fresh UGC-style creative every week. MagicFit makes that volume achievable without hiring an agency.

Try MagicFit Free →

How to use this Break-Even ROAS Calculator

Break-even ROAS is the single most important number in your ad account. Above it you are profitable. Below it you are losing money on every sale, regardless of what the platform dashboard says. Your payment processor has already taken fees before revenue hits your bank account, so never treat the ad manager's reported ROAS as real ROAS without accounting for COGS, shipping, and fees.

The gap between break-even ROAS and your actual ROAS is your margin of safety. If your break-even is 2.5x and you are running at 3.0x blended, any week that drops 15 percent wipes you out. Aim for at least 30 to 50 percent headroom above break-even before you scale spend. Use the max CAC number to guide prospecting: that is the most you can pay for a new customer before the first order is unprofitable. First-order CAC at break-even only makes sense if you trust your repeat purchase rate to pick up the slack.

Run this monthly. AOV drifts when you launch new products or run promotions. COGS drifts when you change suppliers or freight rates shift. Set a calendar reminder the first of every month.

Frequently Asked Questions

Most DTC brands land between 1.8x and 3.2x break-even ROAS. Lower AOV plus higher COGS pushes the number up. A $30 AOV with 50 percent COGS and $7 shipping often needs 4x just to break even, which is why low-AOV brands usually need subscription or strong repeat buying to survive paid ads.

This Is What Winning Ads Look Like

Video and static creatives built for performance, across every format, style, and platform.

Workout Haul

UGC · Apparel

Glow Routine

UGC · Skincare

First-Sip Review

UGC · Beverage

40,000+

brands using MagicFit

4.2×

average ROAS lift

510%

engagement increase

85%

time saved on content

Powering creatives for fast-growing brands worldwide

True ClassicVape SuperstoreRoad iDAlphaFitSolaraForteKovaDRVN

Ready to start hitting ROAS that actually scales?

Join 40,000+ brands creating scroll-stopping content in minutes.

Start with Free Credits

No credit card required · 40,000+ brands inside