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For e-commerce brands running Google Ads: the ROAS you actually need to break even, the most you can pay for an order, and what happens to profit when you scale spend and efficiency slips.
On gross margin alone (60%) you would think break-even is 1.67x. Once shipping, fees, discounts and returns are counted, real margin is 49% and break-even is 2.04x. Scaling against the first number is how accounts grow revenue and lose money at the same time.
Each cell is monthly contribution profit. Green clears your 2.04x break-even, red does not.
At ₹1,00,000 and 3.5x you make ₹71,656 a month - the outlined column below.
| Monthly spend | 1.2x | 1.8x | 2.3x | 2.9x | 3.4x | 3.5xyours | 3.9x | 4.5x |
|---|---|---|---|---|---|---|---|---|
| ₹50,000 | -₹20,573 | -₹5,860 | ₹6,401 | ₹21,115 | ₹33,376 | ₹35,828 | ₹45,637 | ₹60,350 |
| ₹75,000 | -₹30,860 | -₹8,790 | ₹9,602 | ₹31,672 | ₹50,064 | ₹53,742 | ₹68,456 | ₹90,526 |
| ₹1,00,000now | -₹41,146 | -₹11,720 | ₹12,803 | ₹42,229 | ₹66,752 | ₹71,656 | ₹91,274 | ₹1,20,701 |
| ₹1,50,000 | -₹61,720 | -₹17,580 | ₹19,204 | ₹63,344 | ₹1,00,128 | ₹1,07,484 | ₹1,36,911 | ₹1,81,051 |
| ₹2,00,000 | -₹82,293 | -₹23,439 | ₹25,605 | ₹84,459 | ₹1,33,503 | ₹1,43,312 | ₹1,82,548 | ₹2,41,402 |
| ₹3,00,000 | -₹1,23,439 | -₹35,159 | ₹38,408 | ₹1,26,688 | ₹2,00,255 | ₹2,14,969 | ₹2,73,822 | ₹3,62,102 |
Click any cell to see exactly how that number is worked out.
The grid above lets you read across a row as if ROAS holds while spend triples. It never does - you buy the cheapest demand first. Set how fast efficiency decays and the table below follows the path you would really take.
| Monthly spend | Blended ROAS | Revenue | Orders | CPA | Marginal ROAS | Net profit |
|---|---|---|---|---|---|---|
| ₹50,000 | 4.12x | ₹2,05,882 | 94 | ₹531 | - | ₹50,974 |
| ₹75,000 | 3.74x | ₹2,80,817 | 129 | ₹584 | 3.00x | ₹62,726 |
| ₹1,00,000 | 3.50x | ₹3,50,000 | 160 | ₹624 | 2.77x | ₹71,656 |
| ₹1,50,000 | 3.18x | ₹4,77,389 | 218 | ₹687 | 2.55x | ₹84,133 |
| ₹2,00,000 | 2.98x | ₹5,95,000 | 272 | ₹734 | 2.35x | ₹91,816 |
| ₹3,00,000stop here | 2.71x | ₹8,11,561 | 371 | ₹808 | 2.17x | ₹98,027 |
Blended ROAS averages your cheapest and most expensive customers together, so it stays respectable long after new spend has stopped paying. Marginal ROAS is what the next slice of budget returns on its own. Here it drops below your 2.04x break-even after ₹3,00,000 a month, even though blended ROAS still reads 2.71x. That is the point to stop adding budget and fix efficiency instead.
Break-even ROAS = 1 / contribution margin
Contribution margin is what is left after everything that varies with an order: product cost, shipping, packing, payment fees, discounts and returns. Not gross margin, which counts product cost alone and will tell you a comfortable lie.
Profit = spend x (ROAS x margin - 1)
Returns are charged twice on purpose, because that is what happens: you lose the sale and you still paid to ship it and still paid the card fee. Processors do not refund their cut on a refund.
The calculator works on estimates. A free audit pulls your actual AOV, margins, wasted spend and where scaling stops paying, straight from your Google Ads account. No pitch, no pressure.
The return on ad spend at which an extra order makes you exactly nothing. Below it every additional sale costs you money, above it each one contributes. It is calculated as 1 divided by your contribution margin, so a 50% margin means a break-even ROAS of 2.0x.
Gross margin only subtracts the cost of the product. Contribution margin also subtracts shipping, packing, payment fees, discounts and returns, which are all real costs that scale with every order. A brand at 70% gross margin is often near 50% contribution margin, which moves break-even ROAS from 1.43x to 2.0x. Using the gross figure is the most common reason an account looks profitable while losing money.
Because that is what happens. When an order is refunded you lose the revenue, but you already paid to ship it and the payment processor generally keeps its fee. Modelling returns as a simple revenue reduction understates their cost, so the calculator charges both the lost sale and the costs you cannot recover.
After. The target profit slider is a share of revenue that survives both your variable costs and your ad spend, which is why raising it pushes the required ROAS up. It is struck before fixed costs though, so it is not the same as net margin. Salaries, rent and software still have to come out of it, which is why the tool also shows the revenue you need at that profit level just to cover your fixed costs. A brand can hit a 15% target here and still lose money overall if overheads are heavy.
Blended ROAS averages every customer together, including the cheap ones you would have got anyway, so it stays healthy long after new budget has stopped paying for itself. Marginal ROAS is what the next slice of spend returns on its own. An account can show a comfortable 4x blended while its most recent budget increase is returning under 1x.
It is a scenario, not a forecast. The decay rate is an assumption you set, not something derived from your account. Proper diminishing-returns modelling needs historical spend data and incrementality testing. Use the projection to understand the shape of the problem and to pressure-test a budget plan, then validate against what happened last time you increased spend.
Partly. Enter your average deal value as the order value and your close rate through the discount field as a rough proxy. The break-even logic holds, but lead gen usually needs a lead-to-sale conversion step and a longer payback window that this calculator does not model directly.