Ecommerce unit economics

How to calculate break-even ROAS from real product costs

Break-even ROAS tells you how much revenue is required for each dollar of ad spend before the order runs out of contribution. It is not a profit target: taxes, labor, apps, chargebacks, discounts, and overhead still need room.

Step 1

Find landed cost

Product cost + supplier shipping + packaging and handling.

Step 2

Find maximum CAC

Price − landed cost − processor fees − refund reserve.

Step 3

Calculate ROAS

Listed price ÷ maximum CAC before overhead.

Worked example

A $26 landed-cost item listed at $78

Listed price: $78.00
Product + shipping + packaging: −$26.00
Payment fee at 2.9% + $0.30: −$2.56
Refund reserve at 4%: −$3.12
Maximum CAC before overhead: $46.32

Break-even ROAS

1.68×

$78.00 ÷ $46.32. An actual $8 CAC would leave an estimated $38.32 contribution, or 49.1%, before overhead.

What to include

Supplier price and inbound or customer shipping
Packaging and per-order handling
Percentage and fixed payment-processing fees
A realistic refund or return reserve
Actual or estimated customer acquisition cost

Shopify advises including every cost involved in making, storing, shipping, and selling a product. Google Ads defines ROAS as conversion value divided by ad cost.

Use your own costs

Calculate the buffer before you spend on traffic.

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Open the free calculator

Method references: Shopify Profit Margin Calculator and Google Ads conversion-value guidance.

Educational estimate only. Verify your own costs, fees, taxes, and policies before making pricing or advertising decisions.