Break-even ROAS calculator with VAT and returns
Find the lowest ROAS your ads can run at without losing money on the first order. Enter order value, VAT and your product, shipping, payment and return costs. Add your work email to see break-even ROAS, break-even CPA and target ROAS, with an AI analysis for your market.
- Break-even ROAS net of VAT and on VAT-inclusive values
- Break-even CPA, net revenue and contribution per order
- Target ROAS that keeps your profit target
- A verdict on your current ROAS, if you add it
- An AI analysis with next steps
This break-even ROAS calculator finds the lowest return on ad spend at which a first order pays for its own ads. It takes VAT out of your order value, subtracts product, fulfillment, payment and return costs, and turns what is left into a break-even ROAS, a break-even CPA and a target ROAS that keeps the profit you choose.
How the calculator works
The market you pick fills in its standard VAT rate (UAE 5%, Saudi Arabia 15%, UK 20%, Qatar and Other 0%), which you can change; currency can be AED, SAR, QAR, GBP, USD or EUR. Then enter average order value including VAT, product cost per order (landed cost), shipping and fulfillment per order, payment fees as a % of order value, return or refusal rate, cost of one return, the profit to keep after ads as a % of net revenue and, optionally, your current ROAS.
The example column uses the calculator's default values (illustrative): a AED 420 order including 5% VAT, AED 160 product cost, AED 35 fulfillment, 3% payment fees, an 8% return rate at AED 120 per return and a 10% profit target.
| Line | Formula | Example |
|---|---|---|
| Net revenue per order | Order value ÷ (1 + VAT rate) | 420 ÷ 1.05 = AED 400.00 |
| Payment fees | Order value × payment fee % | 420 × 3% = AED 12.60 |
| Return cost per order | Return rate × cost of one return | 8% × 120 = AED 9.60 |
| Contribution per order | Net revenue − product cost − fulfillment − payment fees − return cost | 400 − 160 − 35 − 12.60 − 9.60 = AED 182.80 |
| Contribution margin | Contribution ÷ net revenue | 182.80 ÷ 400 = 45.7% |
| Break-even ROAS (net of VAT) | 1 ÷ contribution margin | 1 ÷ 0.457 = 2.19x |
| Break-even ROAS on VAT-inclusive values | Order value ÷ contribution | 420 ÷ 182.80 = 2.30x |
| Break-even CPA | Contribution per order | AED 182.80 |
| Target ROAS (net of VAT) | 1 ÷ (contribution margin − profit target) | 1 ÷ (0.457 − 0.10) = 2.80x |
If contribution is zero or negative, the calculator says no ROAS can break even; if your profit target is at or above your contribution margin, target ROAS shows as not reachable.
Without a current ROAS, the verdict states what you need: "Ads need at least 2.30x platform-reported ROAS (2.19x net of VAT) to break even on the first order." With one, it compares your ROAS with break-even and your target, both on VAT-inclusive values: 2.50x is above break-even but below the 2.94x (2.80 × 1.05) that keeps 10% profit, so it gets a warning. An analysis with next steps follows, written by AI from your numbers (or rule-based if the AI is unavailable).
How to read your result
Match the figure to the report. If your store sends VAT-inclusive order values to ad platforms, compare their ROAS with the VAT-inclusive break-even. Use the net figure for ROAS you calculate on net revenue.
Bid to target, not break-even. Break-even CPA, AED 182.80 in the example, is your ceiling per order, and at break-even nothing is left after ads. There is no universal good break-even ROAS: your prices and costs set it. The break-even ROAS formula guide has more worked examples.
VAT, payment and return costs in the GCC and UK
The standard VAT rate is 5% in the UAE, 15% in Saudi Arabia since July 2020 and 20% in the UK. Qatar's General Tax Authority lists income, capital gains, withholding and excise taxes, but no VAT. The example order with only the VAT rate changed:
| VAT rate | Net revenue | Break-even (net) | Break-even (VAT-inclusive) |
|---|---|---|---|
| 0% (Qatar) | 420.00 | 2.07x | 2.07x |
| 5% (UAE) | 400.00 | 2.19x | 2.30x |
| 15% (Saudi Arabia) | 365.22 | 2.47x | 2.84x |
| 20% (UK) | 350.00 | 2.64x | 3.16x |
If you offer cash on delivery, count orders refused at the door in the return or refusal rate and COD fees in payment fees.
How Grower helps
Grower's channels leaderboard ranks connected ad channels by ROAS and CPA, so you can see which clear your break-even. Its attribution engine de-duplicates conversions from every channel into one count, and Plan compares budgets by month or campaign group with live spend.
Frequently asked questions
Why does the calculator show two break-even ROAS figures?
One is on revenue without VAT, the other on VAT-inclusive order values. If ad platforms receive VAT-inclusive order values, their reported ROAS includes VAT, so compare it with the VAT-inclusive break-even: 2.30x, not 2.19x, in the UAE example, and 3.16x, not 2.64x, at the UK's 20% VAT.
What is the difference between break-even ROAS and target ROAS?
At break-even ROAS, contribution exactly pays for the ads and nothing is left. Target ROAS keeps the profit you choose, as a share of net revenue. With a 45.7% contribution margin and a 10% profit target, target ROAS is 1 ÷ 0.357, or 2.80x net of VAT. If your target is at or above your margin, the calculator shows it as not reachable.
Does the calculator include repeat purchases?
No. It works on the first order, so it shows whether that order pays for its own acquisition. If customers come back, you may accept a lower first-order ROAS and earn it back later. The CAC payback calculator shows how long that takes, from monthly gross profit per customer and churn.
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