Free tool
True break-even ROAS calculator
Break-even ROAS is the return on ad spend at which ads exactly cover their own cost. This calculator includes the management fee, which most calculators leave out: break-even ROAS equals ad spend plus fee, divided by ad spend times gross margin. At a 40% margin, £1,000 of spend and a £400 fee, it's 3.5, not 2.5.
What you keep from each sale after the cost of the product or service, before ads.
Most UK SMEs pay £500 to £1,500 a month; small business flat fees start around £150. Enter 0 if you run the ads yourself.
Revenue from ads divided by ad spend, from your own records if you can.
Your true break-even ROAS
5.00
Ads must bring in this much revenue for every £1 spent, just to cover the spend and the fee.
On ad spend alone
2.50
The figure most people work out
Revenue needed a month
£5,000
Including the fee raises the bar by 100%. Leave it out and you can look profitable while losing money every month.
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The same result, plus what it means for a business like yours.
What does it calculate?
The return your ads need for every £1 spent, just to cover the spend and the management fee. It also shows the figure most people work out, on ad spend alone, so you can see the gap, and the monthly revenue your ads need to break even.
How do I read the result?
If your real ROAS, from your own records, is above the true break-even figure, your ads make gross profit after the fee. If it's below, they cost you money, however good the revenue looks. The gap between the two figures is the part of your budget the fee has to come from.
Why include the management fee?
Because you pay it. Break-even quoted on ad spend alone understates what an owner needs. On small budgets the fee is a large share of the total, which is why I recommend Set Up and Go below about £600 a month.
From experience
Seehab AhmedFounder, Stratus Growth
£15 to £20 a day of ad spend plus a management fee rarely breaks even, and the usual break-even figure leaves the fee out.
The most common mistake is seeing the revenue come in without realising you're still under break-even ROAS, or never working out what that figure needs to be at all.
Questions people ask
What's the formula for true break-even ROAS?
What management fee should I enter?
What counts as gross margin?
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