How break-even ROAS works
Every order has costs beyond advertising: the product itself, shipping and packing, and payment or platform fees. What's left is your profit per order before ads. Break-even ROAS is the point where ad spend eats all of it:
Break-even ROAS = average order value ÷ profit per order before ads
With an $80 order, $32 product cost, $8 shipping and 3% fees, you keep $37.60 per order. Break-even ROAS is $80 ÷ $37.60 ≈ 2.13x. If Google Ads returns less than $2.13 for every dollar spent, those sales lose money.
Setting a target ROAS in Google Ads
Your target ROAS should sit above break-even by enough to cover the profit you want. The calculator works this out for you: it reserves your desired profit margin from each order and calculates the ROAS needed to hit it. Enter that number as the target ROAS in Shopping or Performance Max campaigns using Maximize Conversion Value.
Different products have different margins. Grouping products by margin with custom labels in your feed lets each group run at its own target. It's one of the most effective changes in most Shopping accounts.