Break-even ROAS calculator for Australian ecommerce
The return your costs actually need, with GST and a management fee in it. Calculator included.
By Mark Tran · Updated
What return do your ads need?
Break-even ROAS is the revenue required to cover the costs in your calculation, divided by ad spend. With a management fee included, the formula is (ad spend + management fee) ÷ (ad spend × contribution margin). Enter the margin as a decimal: 60% becomes 0.60.
This covers variable costs, advertising and management. It does not cover fixed overheads unless you explicitly include them in a wider calculation. It also does not establish that the advertising caused every sale credited to it.
I start here because a ROAS target in Meta or Google is only useful once you know what the business can afford.
Calculate your required return
The starting numbers are a worked example, not a quote or a client result. Enter every amount excluding GST, for the same period. The result also shows the threshold as Meta or Google report it when they count revenue including GST.
Use the total spend for the activity you are assessing.
After product and other variable costs; before ads and management.
Enter zero if you manage the ads yourself.
Used to calculate the extra return needed to recover a new fee.
Break-even before fixed overheads
2.00x
Revenue required: $20,000.00 per month, excluding GST.
If Meta or Google count revenue including GST: 2.20x as they report it.
- Return to recover a new fee
- 3.33x
- Extra return needed
- 0.33 points
- Extra revenue needed for the fee
- $3,333.33
- Contribution at your current return, after ads and fee
- $6,000.00
Fee recovery assumes unchanged ad spend and margin, with the fee newly added to your current performance. Fixed overheads and costs outside your margin input remain unpaid. A ROAS reported by Meta or Google does not establish incremental revenue.
Use contribution margin, not just product margin
If an A$100 order leaves A$60 after the costs that vary with that order, the contribution margin before advertising is 60%. Product cost is only part of the calculation. Consider payment fees, packaging, fulfilment, shipping subsidies and the expected cost of returns where they apply.
Keep the revenue and cost definitions consistent. For example, do not deduct returns twice if your revenue is already net of refunds. Enter every figure excluding GST; the next section covers why the number Meta or Google shows can still include it.
For a mixed catalogue, use a margin that reflects the products actually being sold. A profitable average across the whole store can hide an advertised product with much tighter economics.
A worked example: break-even is 2.00x
These are illustrative numbers, not a client result or a fee quote.
| Input | Amount |
|---|---|
| Ad spend | A$10,000 |
| Management fee | A$2,000 |
| Contribution margin before ads | 60% |
| Revenue required | A$20,000 |
| Break-even ROAS before fixed overheads | 2.00x |
A$20,000 of revenue leaves A$12,000 at a 60% contribution margin. Ad spend and management also total A$12,000. Nothing remains for fixed overheads or profit at that threshold.
GST: why the ROAS Meta shows needs to clear a higher bar
If your business is registered for GST, the GST you collect on a sale is not yours, and you claim back the GST on your ad spend and management fee. So the break-even above is worked out excluding GST on both sides.
The ROAS Meta and Google show can mix the two bases. The purchase value your store sends them can include GST, while the spend they report does not. When that happens their ROAS reads about 10% higher than the return your business actually earns. The example's 2.00x break-even becomes 2.20x as Meta reports it. A campaign showing 2.10x looks profitable and is losing money.
To check your own setup, pick one order with no shipping charge or discount: if Meta or Google records A$110 for an A$100 order plus GST, their revenue includes GST and the higher threshold is the one to use. Confirm your GST position with your accountant.
Covering a new management fee is a different question
Suppose the same account already produces A$30,000 of revenue on A$10,000 spend, a 3.0x return. At a 60% contribution margin, it leaves A$8,000 after advertising and before management.
If you then add an A$2,000 management fee, preserving that A$8,000 requires another A$3,333.33 of revenue: A$2,000 ÷ 0.60. At unchanged ad spend, the required return rises from 3.0x to approximately 3.33x.
The calculator shows both thresholds. 2.00x covers the example's included costs; 3.33x preserves its previous contribution after adding the fee. Both assume the same spend and margin. If either changes, recalculate.
What this calculation cannot tell you
- Whether the ads caused sales that would not have happened otherwise.
- Whether new customers will reorder, or what those future orders will contribute.
- How much cash you need for stock, returns and the timing of payments.
- Whether Meta's or Google's attributed revenue matches your store's revenue definition.
A first-order loss might be acceptable for a business with evidenced repeat-purchase economics and the cash to support it. It should be a deliberate decision, not an assumption hidden inside a ROAS target.
Before applying the threshold to campaign reports, read why Meta, Google and Shopify revenue differs. For account-specific help, see my Google Ads management and Meta Ads management services.
Want me to work out yours?
If you run an Australian ecommerce store and would rather not do this alone, I do it on a free 15-minute Meta ads audit. Your live campaigns on screen, your real break-even ROAS worked out from your own margins, and the one fix to make first. No access needed, no obligation.
Method
The examples are arithmetic models using the stated inputs, not advertising benchmarks. The calculator treats variable costs as a constant percentage of revenue and management as a fixed amount for the chosen month. Change the inputs when the product mix, fee or spend changes.