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Break-even ROAS & Max CAC Calculator

Find the ROAS your ads need to break even, and the most you can spend to win a customer.

Reviewed by CA Apurav GargUpdated Your numbers stay in your browser

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Calculator

Note:
Example values — replace with yours.

Your order and margin

The average order value your ads dashboard shows.

What each order leaves before marketing. Don’t know your CM2? Work it out first

How much of net revenue you want left after marketing.

Advanced options

Use “Custom rate” for rates like 3% or 0.25%.

Used to work out net revenue, the same way as the Contribution Margin calculator.

is measured on revenue

Most ad platforms report revenue including GST.

Including the first order. Blank = skip.

Often higher: no acquisition discount. Blank = skip.

Your result

Break-even

2.5×

Below this, every rupee of ads loses money on the first order.

Target ROAS for a 20% CM3
3.9×
Max CAC, first order
₹463
Max CAC over 12 months
₹963

How the ROAS figures are built

How the ROAS figures are built
Item₹ per order / ×How we got this
Revenue per order (incl. GST)₹1,180
Net revenue per order dispatched₹800
₹463
Break-even ROAS2.5×
Marketing allowed per order for a 20% CM3₹303
Target ROAS3.9×

Max CAC over 12 months: ₹463.00 + (2 − 1) × ₹500.00 = ₹963.00. The limits assume all CM2 is spent on winning the customer — any CM3 you want to keep comes out of it.

Target CM3 shown as 20.0% of net revenue. Tap ⓘ to see the working.

What this tells you

A ROAS that looks healthy in your ads dashboard can still lose money once product cost, shipping, fees and returns are paid. This calculator turns your contribution margin into the ROAS your ads must reach to break even, and the higher ROAS needed to keep a margin you choose.

It also shows the most you can spend to win a customer — on the first order, and over a year if they come back.

Assumptions used

  • Product GST rate choices: 0%, 5%, 18%, 40%, or a custom rate.
  • CM2 is per order dispatched, after product cost, packaging, fees, shipping and returns, before marketing — the same definition as the Contribution Margin calculator.
  • Net revenue = (1 − RTO rate) × order value excluding GST, also the same definition as the Contribution Margin calculator.
  • Revenue for ROAS is counted the way your ad platform reports it — including GST by default.
  • The 12-month customer acquisition cost assumes the repeat orders and their CM2 you enter; it ignores the time value of money.
Legal references and sources
Product GST rate choices
Rate rationalisation effective 22 September 2025 on the recommendations of the 56th GST Council meeting. Tools also offer "Custom" for special rates such as 3% or 0.25%.
Effective from 22 Sept 2025 · Awaiting CA verification · Official source

How this is calculated

  1. Revenue per order = order value including GST, or ÷ (1 + GST rate) if ROAS is measured excluding GST.
  2. If CM2 is zero or less, the order loses money before any ads, so there is no break-even ROAS.
  3. Break-even ROAS = revenue per order ÷ CM2.
  4. Net revenue per order dispatched = (1 − RTO rate) × order value ÷ (1 + GST rate).
  5. Marketing allowed = CM2 − target CM3 % × net revenue.
  6. Target ROAS = revenue per order ÷ marketing allowed (not reachable if that is zero or less).
  7. Max customer acquisition cost on the first order = CM2; over 12 months = CM2 + (orders per customer − 1) × CM2 on repeat orders.

Worked examples

Example 1: The contribution margin example, aiming for a 20% CM3

Order value ₹1,180 including 18% GST, 20% RTO, CM2 of ₹463 per order dispatched (the Contribution Margin calculator’s first example), aiming to keep 20% of net revenue as CM3. ROAS measured on revenue including GST. Customers order twice a year on average, with ₹500 CM2 on the repeat order.

Revenue per order for ROAS
₹1,180.00
Net revenue per order dispatched
₹800.00
Break-even ROAS
2.5×
Marketing allowed for the target
₹303.00
Target ROAS
3.9×
Max CAC, first order
₹463.00
Max CAC over 12 months
₹963.00

Example 2: The same order, with ROAS measured excluding GST

As in example 1, but the ad platform reports revenue excluding GST (₹1,000 per order).

Revenue per order for ROAS
₹1,000.00
Net revenue per order dispatched
₹800.00
Break-even ROAS
2.2×
Marketing allowed for the target
₹303.00
Target ROAS
3.3×
Max CAC, first order
₹463.00

Example 3: A margin target the order cannot reach

As in example 1, but aiming to keep 60% of net revenue as CM3. That is ₹480 — more than the ₹463 CM2 the order makes before marketing.

Revenue per order for ROAS
₹1,180.00
Net revenue per order dispatched
₹800.00
Break-even ROAS
2.5×
Marketing allowed for the target
−₹17.00
Target ROAS
Not reachable at current margins
Max CAC, first order
₹463.00

Our Virtual CFO service sets these targets with you from your actual monthly numbers and tracks them as you scale.

Questions sellers ask

What is break-even ROAS?

It is the return on ad spend at which the first order exactly pays for the ads that won it. Below it, every rupee of ads loses money on that order; above it, the order adds to your margin.

Why does this use CM2 and not my gross margin?

Gross margin ignores the cost of getting an order to the customer — packaging, fees, shipping and returns. CM2 includes them, so it is the real amount an order leaves to spend on marketing. Using gross margin makes ads look more profitable than they are.

Should ROAS be measured including or excluding GST?

Most ad platforms report revenue including GST, so the default here matches that. If you have set your platform to report revenue excluding GST, switch the basis under Advanced options — otherwise the targets will look easier than they are.

What is the difference between break-even ROAS and target ROAS?

Break-even ROAS spends all of CM2 on ads and leaves nothing. Target ROAS leaves the CM3 margin you set aside first, so it is always higher. If the target margin is more than CM2, no ROAS can reach it.

How do repeat orders change the most I can spend to win a customer?

If customers come back, each repeat order adds its CM2 without needing the same acquisition spend. The 12-month figure adds those repeat orders to the first one, giving a higher ceiling on customer acquisition cost — as long as the repeat rate is realistic.

Where does my CM2 come from?

Work it out in the Contribution Margin calculator. Its “Check my break-even ROAS” button carries your order value, GST rate, RTO rate and CM2 straight into this calculator.

Want our team to check these numbers against your actual settlement reports?

We reconcile marketplace settlements, GST and TDS for D2C and marketplace sellers every month. Share your reports and we will walk you through what we find.

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Disclaimer

Indicative estimate for general information only, based on the assumptions shown on this page. It is not professional advice. Rates on this page have not yet been verified by a CA.

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