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Understand your minimum Google Ads performance. Use our Break-Even ROAS Calculator to know exactly what return your local business or medical practice needs to
The average revenue you generate from a single conversion, like a new client or a product sale.
Default: 750
The direct costs associated with delivering your service or product for one sale (e.g., COGS, staff time, commissions, payment fees).
Default: 300
The percentage your marketing agency charges on top of your Google Ads spend. Use 0 if you manage ads yourself.
Default: 15
The Break-Even ROAS is calculated by first determining your gross profit margin per sale, after accounting for all direct variable costs but before advertising expenses. We take your Average Revenue Per Sale and subtract your Average Variable Cost Per Sale to find the profit per conversion. This profit is then divided by the Average Revenue Per Sale to get a percentage profit margin. Then, we adjust this margin to include your marketing agency's fee, if applicable.
A dental clinic wants to know their Break-Even ROAS for acquiring a new patient through Google Ads.
1.72x (or 172%)
For every $1 spent on Google Ads, the dental clinic needs to generate $1.72 in revenue to cover patient costs and the agency fee. Their profit margin before ads is (1200-400)/1200 = 0.6667. With a 15% agency fee, the calculation is (1 + 0.15) / 0.6667 = 1.15 / 0.6667 = 1.72.
A small law firm advertises for initial consultations, which average $2500 in billable work.
1.47x (or 147%)
For every $1 spent on Google Ads, the law firm needs to generate $1.47 in revenue to cover client-specific costs. Their profit margin before ads is (2500-800)/2500 = 0.68. With no agency fee, the calculation is (1 + 0) / 0.68 = 1.47. This is their baseline for campaign profitability.
A boutique clothing store runs ads for a product line where the average sale is $150. The cost of goods for these products is $60, plus $5 in payment
2.12x (or 212%)
The store needs to generate $2.12 in revenue for every $1 of ad spend to break even. Their profit margin before ads is (150 - 65) / 150 = 85 / 150 = 0.5667. With a 20% agency fee, the calculation is (1 + 0.20) / 0.5667 = 1.20 / 0.5667 = 2.117.
Skip the spreadsheet
Armitage tracks these numbers automatically across SEO and paid ads. One dashboard. Updated daily. No manual exports.
See your real numbersThis calculator uses a standard break-even ROAS formula, adjusting for gross profit margin and agency fees as a percentage of ad spend. It assumes direct variable costs are factored into the 'Average Variable Cost Per Sale'.
Break-Even ROAS is the minimum Return on Ad Spend you need for your ad campaigns to cover their direct costs. This means your advertising efforts aren't losing money. It's not about making a profit yet, but about ensuring you're not in the red. For a local business, knowing this number protects your marketing budget from underperforming campaigns. It gives you a baseline for success.
For local businesses, every dollar counts. Understanding your Break-Even ROAS prevents you from pouring money into unprofitable ad campaigns. It helps you quickly identify if a campaign is failing to even cover its own costs. This allows you to adjust your strategy or stop underperforming ads before they drain your budget. It's a critical metric for financial health in marketing.
CLTV changes how you view Break-Even ROAS. If a new customer from an ad campaign generates repeat business over years, you might accept a lower initial ROAS. This is because the long-term value outweighs the immediate cost. For medical practices, a new patient might have a high CLTV, justifying a higher initial ad spend. It's about seeing the bigger picture beyond the first transaction.
Yes, you can. You should calculate your average profit margin across your services or products that are promoted via ads. If you have vastly different margins, consider calculating Break-Even ROAS for each service line separately. This gives you a more accurate picture for specific campaigns. For professional services firms, this might mean separating calculations for a consultation versus a full service package.
If your actual ROAS is below your break-even point, your ad campaigns are losing money. You need to review your campaign performance immediately. This could mean adjusting your bids, refining your targeting, improving your ad copy, or optimizing your landing pages. It's a signal to act fast to prevent further losses. Consider seeking expert help to diagnose the issues.
Not necessarily. A high Break-Even ROAS means you need a higher return to cover your costs. This usually happens with lower profit margins. It's not inherently bad, but it means your ad campaigns need to be extremely efficient. You have less room for error. It emphasizes the need for tight budget management and constant optimization to stay profitable.
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