The short answer
Break-even ROAS = 1 ÷ your margin before ads
Break-even ROAS is the return on ad spend at which an order pays for its own ads and nothing more. Work out what one order leaves you after product cost, shipping, payment fees and refunds (your margin before ads), then divide 1 by it. A 37.5% margin before ads means a break-even ROAS of 2.67: below that, every ad-driven order loses money.
Worked example (the numbers above)
| Kept after refunds | $50 × (1 − 3%) = $48.50 |
|---|---|
| Payment fees | $50 × 2.9% + $0.30 = $1.75 (not returned on refunds) |
| Margin before ads | $48.50 − $20 product − $7 shipping − $1 packaging − $1.75 fees = $18.75 (37.5% of $50) |
| Break-even ROAS | $50 ÷ $18.75 = 2.67 |
| Break-even CPA | $18.75 of ad spend per order |
| ROAS to keep 10% | $50 ÷ ($18.75 − 10% × $50) = 3.64 |
| Your ads | $2,500 ÷ $1,000 = ROAS 2.50, about 50 orders × $18.75 = $937.50 margin − $1,000 ads = −$62.50 |
A ROAS of 2.5 sounds healthy, but with this margin it loses money. That's the gap merchants describe when they ask why an ad "with a ROAS of 3.8 can still lose money".4
Profit per order at different ROAS (example numbers)
| ROAS | Ad cost per order | Profit per order after ads |
|---|---|---|
| 1.5 | $33.33 | −$14.58 |
| 2 | $25.00 | −$6.25 |
| 2.5 | $20.00 | −$1.25 |
| 3 | $16.67 | $2.08 |
| 4 | $12.50 | $6.25 |
| 5 | $10.00 | $8.75 |
Break-even ROAS by margin before ads
| Margin before ads | Break-even ROAS |
|---|---|
| 15% | 6.67 |
| 20% | 5.00 |
| 25% | 4.00 |
| 30% | 3.33 |
| 35% | 2.86 |
| 40% | 2.50 |
| 50% | 2.00 |
| 60% | 1.67 |
ROAS, POAS and CPA in one minute
- ROAS (return on ad spend) = revenue from ads ÷ ad spend. Google shows it as a percentage (500%); most ecommerce tools show it as a multiple (5.0).1
- Break-even ROAS = order value ÷ margin before ads per order = 1 ÷ margin before ads.
- Break-even CPA (max ad spend per order) = margin before ads per order.
- POAS (profit on ad spend) = margin before ads earned from ad orders ÷ ad spend. 1.0 is break-even; above 1.0 the ads made money.2
Which margin? Use your margin after product cost, shipping, payment fees and refunds. Using product cost alone gives a break-even ROAS that's too low, so ads look profitable when they aren't. Fixed costs like your Shopify plan and apps aren't in this per-order number; the profit calculator includes them for the whole month.
Platform ROAS isn't profit. Ad platforms report revenue they attribute to themselves, and they don't know your product costs, shipping, discounts, fees or refunds. Check ads against the profit in your own orders.
Questions
What is a good ROAS for a Shopify store?
There isn't one number. A good ROAS is any ROAS above your break-even ROAS, which depends on your margin before ads. A store with a 50% margin breaks even at a ROAS of 2.0; a store with a 25% margin needs 4.0. Work out your own break-even ROAS first, then set targets above it.
Is a 2 ROAS profitable?
Only if your margin before ads is above 50%. At a 2.0 ROAS, ads cost half of every order's value, so the order has to leave you more than half its value after product cost, shipping, fees and refunds. With the example numbers on this page (37.5% margin), a 2.0 ROAS loses about $6.25 per order.
What's the difference between break-even ROAS and break-even CPA?
They're the same limit seen two ways. Break-even CPA is the most you can spend on ads to get one order (your margin before ads per order). Break-even ROAS is your order value divided by that amount.
What is POAS?
Profit on ad spend: the profit (here, margin before ads) that ad-driven orders earn, divided by what the ads cost. A POAS of 1.0 means the ads paid for themselves and nothing more; 1.5 means every $1 of ads brought back $1.50 of margin.
Should refunds be in the calculation?
Yes. A refunded order brings in no revenue, but you've usually still paid for the ad, the shipping and the card fee. On Shopify Payments the original card fee isn't returned when you refund an order.
Does this include my Shopify plan and apps?
No. Fixed monthly costs don't change per order, so they're left out of break-even ROAS. Use the Shopify profit calculator to include them for a whole month, or the report to see them by month.
Is this financial advice?
No. It's an estimate from the numbers you type in, to help you think about ad spend. It isn't accounting, tax or financial advice.
Sources
- Google Ads Help: Return on ad spend (ROAS)
- Polar Analytics: POAS (profit on ad spend)
- Shopify Help Center: Refunds and Shopify Payments payouts (card fee isn't refunded)
- Shopify Community: Why can an ad with a ROAS of 3.8 still lose money?
- Shopify pricing: Shopify Payments card rates Checked October 18, 2026.
Checked October 18, 2026. If something has changed, email hello@groundworkmetrics.com and I'll fix it.