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Break-even ROAS and CAC ceiling calculator

Break-even ROAS is the return on ad spend at which a first order pays for its ad cost and nothing more. It equals your average order value divided by your contribution margin per order. Below it, every first order loses money.

Revenue per order, after discounts.

Landed cost of the goods in one order.

What you pay, not what the customer pays.

Typical range 2–4%.

Use your last 90 days.

Packaging, inserts, per-order app fees.

Leave at 1 unless you've measured it.

Optional. 0 means break even.

Enter an average order value above 0.

The full Sheet also turns your CAC ceiling into a weekly creative budget. It's in the free Starter.

Get the Starter

How the calculation works

  1. 1.

    Contribution margin per order = AOV − COGS − shipping and fulfilment − payment fees − returns allowance − other variable costs. It's what one order leaves you before any ad spend.

  2. 2.

    Break-even ROAS = AOV ÷ contribution margin per order. If a $60 order leaves you $30, you need $2 of revenue for every $1 of ads to break even.

  3. 3.

    First-order CAC ceiling = contribution margin per order. Pay more than this to win a customer and the first order loses money.

  4. 4.

    90-day CAC ceiling = contribution margin × orders per customer in 90 days. It assumes repeat orders carry the same margin. Use it only with a measured repeat rate.

  5. 5.

    Target CAC = contribution margin − (target profit % × AOV).

Worked example (illustrative numbers, not a result)

AOV$60
COGS$18
Shipping$7
Fees 3%$1.80
Returns 5%$3.00
Other$0
Contribution margin$30.20 (50.3%)
Break-even ROAS1.99
First-order CAC ceiling$30.20

ROAS or MER?

Platform ROAS counts the revenue an ad platform attributes to itself. MER, the marketing efficiency ratio, is total revenue divided by total ad spend, so it doesn't depend on attribution. MER includes repeat and organic revenue, which means a healthy MER can hide new-customer acquisition that loses money. Check both against the break-even number above.

FAQ

What is a good ROAS for a DTC brand?

One above your break-even. A 2.0 ROAS is profitable at a 60% contribution margin and loses money at 40%. Calculate yours before comparing with benchmarks.

How do I calculate CAC?

Total acquisition spend in a period divided by the new customers acquired in that period. Compare the result with your CAC ceiling above.

What's the difference between ROAS and MER?

ROAS uses the revenue an ad platform attributes to its ads. MER uses all revenue divided by all ad spend. ROAS tells you which ads to cut; MER tells you whether the business is paying for its marketing.

Should I include repeat purchases?

Only if you've measured them. Use the 90-day ceiling when your data shows repeat orders, and the first-order ceiling when it doesn't.

Is my data stored?

No. Everything is calculated in your browser. Nothing is sent or saved.