ROAS (return on ad spend) is the revenue from your ads divided by their cost: $15,000 in sales from $4,000 of ads is a ROAS of 3.75x, or 375%. Whether that makes money depends on your margin. Your break-even ROAS is 1 ÷ your contribution margin before ad spend, so a store that keeps 40% of each sale after product, shipping and payment costs breaks even at 2.5x.
How do you calculate ROAS, break-even ROAS and target ROAS?
| Metric | Formula | Example (40% margin) |
|---|---|---|
| ROAS | Revenue ÷ ad spend | $15,000 ÷ $4,000 = 3.75x |
| Break-even ROAS | 1 ÷ contribution margin | 1 ÷ 40% = 2.5x |
| Target ROAS | 1 ÷ (contribution margin − target profit margin) | 1 ÷ (40% − 10%) = 3.33x |
| Profit after ad spend | Revenue × margin − ad spend | $6,000 − $4,000 = $2,000 |
| POAS (profit on ad spend) | Revenue × margin ÷ ad spend | $6,000 ÷ $4,000 = 1.5x |
| Max cost per acquisition | AOV × margin | $80 × 40% = $32 |
| Max cost per click | Max CPA × conversion rate | $32 × 2% = $0.64 |
ROAS is written as a ratio (3.75x) or a percentage (375%). Google Ads uses the percentage: its Target ROAS guide turns $5 in sales from $1 of ad spend into a 500% target. A 0% target profit margin gives your break-even ROAS, and a target at or above your contribution margin can’t be reached.
What is contribution margin, and why not markup?
Contribution margin is the share of each sale left after the costs that come with every order: product cost, the shipping you pay, payment fees and packaging. It leaves out ad spend, which the calculator compares against it.
Markup is different: an item that costs $30 and sells for $60 has a 100% markup but a 50% margin, and less after shipping and fees. Using markup makes break-even ROAS look too low.
How do you use this ROAS calculator?
- Pick ROAS to check past results, Break-even ROAS to find your floor, or Target ROAS to plan for a profit goal.
- Enter your margin as a percentage, or switch to Per-order costs and enter your order value and costs.
- Read the results, formulas and profit table; the break-even row is highlighted.
Where do you find revenue, ad spend and AOV for a Shopify store?
- Average order value: in your Shopify admin, go to Analytics > Reports and open Average order value over time. Shopify calculates it as (gross sales − discounts) ÷ orders, without shipping and taxes (Sales reports). The marketing reports include taxes and shipping in order value (Marketing reports), so pick one basis and keep it.
- Product cost: add a Cost per item to each product or variant. Profit reports such as Gross profit by product only include items that had a cost when they sold (Profit reports).
- Ad spend and ROAS: the Performance by marketing channel report shows ad spend and ROAS only for channels that report cost data to Shopify, such as a connected ad platform. Shopify notes that Facebook and Google campaigns on the Growth page don’t show cost or ROAS, and points you to Meta Ads Manager or your Google campaigns (Measuring marketing performance).
- Conversion rate: Shopify divides sessions that completed checkout by all sessions (analytics fields reference). Max cost per click needs orders per ad click, which differs.
Why is ROAS different in Meta, Google and Shopify?
Each system credits sales by its own rules:
- Google Ads counts conversions within a window after an ad interaction: 30 days unless you change it, from 1 to 90 days (About conversion windows), with data-driven attribution for most conversion actions (About attribution models). View-through conversions, after someone saw an ad without clicking, are usually reported in their own column rather than in Conversions, though Demand Gen, App and Performance Max for store goals campaigns can count them (About view-through conversions).
- Meta Ads Manager credits sales under Meta’s own attribution settings, so check which window a report uses before comparing.
- Shopify’s marketing reports can credit sales by last non-direct click, last click, first click, any click or linear attribution. Last non-direct click is the default for marketing activity, while a report with a sales metric and a marketing dimension starts on last click, so check which model a report uses (Marketing reports).
One order can be claimed by several platforms, while consent choices and blocked tracking hide some sales from all of them. As a cross-check, compare total ad spend with Shopify’s sales for the same dates. The GA4 conversion tracking checklist and the Google Consent Mode v2 guide explain where those gaps come from.
What doesn’t break-even ROAS include?
- Fixed costs such as your Shopify plan, apps and staff.
- Returns and refunds, unless you build an allowance into your margin.
- Repeat purchases from customers an ad brought in.
- Agency fees and creative costs, unless you add them to ad spend.
- Sales that would have happened anyway, which platform-reported ROAS can include.
To set your margin, use the profit margin calculator and the Shopify fees calculator.
Frequently asked questions
Is ROAS the same as ROI?
No. ROAS divides revenue by ad spend, so it ignores what the products cost. ROI compares profit with everything you invested. POAS sits between them: it divides the contribution left after per-order costs by ad spend, so a POAS above 1.0x means the ads paid for themselves.
Should I set my Google Ads target ROAS to my break-even ROAS?
Only if you’re content with no profit on the orders those ads bring in. Google says to set a target ROAS from your business goals, using your historical ROAS as a reference, and warns that a target set too high may limit your ads’ traffic (About Target ROAS bidding). Use the Target ROAS tab to turn a profit goal into a number, and enter it in Google Ads as a percentage: 3.33x is 333%.
What is a good ROAS for a Shopify store?
There isn’t one number that fits every store, because a good ROAS depends on your margin. A store with a 25% contribution margin needs 4x just to break even, while one with a 60% margin breaks even at about 1.67x. Start from your break-even ROAS, then add the profit you need to cover fixed costs with the Target ROAS tab.
Should revenue include shipping and taxes?
Use the same basis as your margin. Sales tax or VAT you collect isn’t yours, so leave it out. If revenue includes the shipping customers pay, count your full shipping cost; if it excludes it, as Shopify’s average order value does, count only the shipping cost you absorb. Check what your ad platform’s conversion value includes before you compare it with Shopify.
How do repeat customers change break-even ROAS?
This calculator covers the orders an ad brings in, not later ones. If customers reliably come back, you might accept a lower ROAS on first orders. Enter a negative target margin in the Target ROAS tab to see the ROAS for the loss you’re willing to take, and check your repeat rate in your own Shopify data before relying on it.
Sources
- Sales reports — Shopify Help Center
- Marketing reports — Shopify Help Center
- Measuring marketing performance — Shopify Help Center
- Profit reports — Shopify Help Center
- Analytics data points (fields) reference — Shopify Help Center
- About Target ROAS bidding — Google Ads Help
- About conversion windows — Google Ads Help
- About attribution models — Google Ads Help
- About view-through conversions — Google Ads Help
Last updated October 26, 2026