Find your breakeven
Why this number matters more than your ROAS
Most people watch ROAS and have no idea what number would make it bad. So a 2.4x looks fine, feels fine, and quietly costs them money every single day.
Breakeven ROAS is the line. Above it you are making money on the ad. Below it you are buying revenue at a loss, no matter how green the dashboard looks. The maths is simple: 100 divided by your gross margin percentage. At 40% margin, that is 2.5x.
Getting your margin right
The calculator is only as honest as the margin you feed it. Gross margin here means what is left of the sale price after the costs that scale with each order:
- What you paid for the product
- Shipping and packaging, if you cover it
- Payment processing fees
- Expected returns and refunds - if 8% of orders come back, that is real
If you are setting conversion values in the ad platform itself, Google's guide to conversion value is worth ten minutes - the same margin logic applies there. Do not deduct rent, salaries or software here. Those do not change with one more order, and including them gives you a target so high you will switch off ads that were genuinely working.
Set your margin once, and let it do this automatically
Tell Magneety your margin and it reports profit rather than revenue - including sending profit to Meta as the conversion value, so the algorithm hunts customers who actually pay you.
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Your breakeven is a floor, not a target. Aim meaningfully above it, because the gap is what pays for everything the gross margin ignored.
| Where you are | What it means | What to do |
|---|---|---|
| Below breakeven | Losing money per order | Pause or rebuild before spending more. Check tracking first - the real number may be better than reported. |
| At breakeven to 1.3x above | Covering product costs only | Fine for a launch or to acquire repeat customers. Not fine forever. |
| 1.5x above and up | Genuinely contributing | Scale carefully and watch whether it holds as spend rises. |
One caveat worth taking seriously: if your customers buy repeatedly, judging a first order against breakeven is too strict. A subscription or a consumable can justify losing money on order one. If you sell a mattress, it cannot.
And before you act on any of this, make sure the ROAS you are comparing is real. Blocked tracking makes ads look worse than they are, and the usual reaction is to switch off something that was working.
Next steps
Common questions
What is breakeven ROAS?
The return on ad spend at which an ad exactly covers the cost of the goods it sold. It is 100 divided by your gross margin percentage. At 50% margin your breakeven is 2x, meaning €1 of ad spend must produce €2 of revenue just to stand still.
Should I include overheads in the margin?
No. Use gross margin - only the costs that rise with each additional order. Including rent, salaries or software produces a breakeven so high that you will pause campaigns which were genuinely contributing profit.
My breakeven looks impossibly high. What now?
That is the calculator telling you something real: at a low margin, paid ads may not be a viable channel at your current pricing. The fix is usually margin, not ads - raise prices, cut product cost, or increase average order value with bundles before spending more.
Does this work for lead generation, not ecommerce?
The same logic applies, but you need the value of a lead first. Take your average deal value multiplied by your close rate, then treat that as revenue per lead. The breakeven maths from there is identical.
Know your floor. Then watch it automatically.
Set your margin once in Magneety and every campaign is judged against your real breakeven - not against a benchmark you found on the internet.
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