Glossary/Break-even ROAS
What is Break-even ROAS?
Break-even ROAS is the platform-reported ROAS at which a campaign returns exactly the money it consumed and no more. It equals one divided by the product’s contribution rate — the share of the selling price left after COGS, marketplace fees, seller-funded vouchers, and fulfillment, but before ad spend. A product that keeps 20% of its price as contribution breaks even at a ROAS of 5.0; a product that keeps 40% breaks even at 2.5. Every ad target a seller sets — Target ROAS, bid caps, budget ceilings — is only meaningful relative to this number, because it is the point where advertising stops being an investment and starts being a transfer to the platform.
01/Formula
Formula
Break-even ROAS = 1 / contribution rate contribution rate = (price − COGS − fees − vouchers − fulfillment) / price ROAS to keep a target margin m = 1 / (contribution rate − m)
Example
A ฿1,000 Shopee SKU: ฿600 COGS, ฿120 commission and payment fees, ฿80 seller-funded voucher, ฿50 packing and courier. Contribution before ads = 1,000 − 850 = ฿150, a 15% contribution rate. Break-even ROAS = 1 / 0.15 = 6.67 To keep 10% net after ads: 1 / (0.15 − 0.10) = 20.0
02/In detail
How do you calculate break-even ROAS?
Build the contribution rate first, per SKU, from the price the buyer actually pays. Subtract unit COGS, the category commission, the payment or transaction fee, the seller-funded portion of vouchers and free-shipping programmes, packing, courier, and a returns reserve. Divide what remains by the price to get the contribution rate, then invert it. Do not use gross margin: gross margin ignores fees and fulfillment, and on a Thai marketplace those routinely account for 15–20 percentage points of price. Using gross margin instead of contribution rate is the most common way sellers end up with a break-even target that is 30–40% too low.
What break-even ROAS should each margin band use?
Break-even ROAS is not a shop-level constant, it is a per-SKU property, and the spread across a normal catalogue is large enough to change which campaigns should exist at all. A shop selling both accessories at 40% contribution and consumer electronics at 12% is running two different businesses as far as ads are concerned, and a single shop-wide Target ROAS will systematically overfund one and starve the other.
contribution break-even ROAS ROAS to keep 10% net 40% 2.50 3.33 30% 3.33 5.00 25% 4.00 6.67 20% 5.00 10.00 15% 6.67 20.00 12% 8.33 impossible
Why can a 12% margin product be impossible to advertise?
Because the formula for a target margin divides by the contribution rate minus that margin. When the margin you want equals or exceeds the contribution the product produces, the denominator goes to zero or negative and no finite ROAS satisfies it. That is not a maths curiosity — it is the honest answer that this SKU cannot fund a 10% net margin through paid traffic at its current price and cost. The remaining levers are real ones: raise the price, renegotiate COGS, cut the seller-funded voucher, bundle it with a higher-contribution product, or accept that it sells organically and stop advertising it.
03/Why it matters
The trap, in one paragraph.
Break-even ROAS converts a vague feeling that ads are “doing fine” into a testable threshold. Without it a seller has no basis for choosing between a ROAS of 4 and a ROAS of 7, so targets get copied from other sellers, from category benchmarks, or from whatever the platform suggested during setup — none of which know the shop’s cost stack. With it, every campaign has a pass or fail line that belongs to the product it sells, and the question shifts from “is this ROAS good?” to “is this ROAS above the line for this SKU?”.
Common mistake
Setting one break-even ROAS for the whole shop. Contribution rate varies more across a catalogue than almost any other input — a 40% accessory and a 12% electronics SKU differ by 5.8× in break-even ROAS. A shop-wide target set from the blended average overfunds the thin products and starves the fat ones, which is the exact opposite of what the seller intended.
04/In DataGlass
How Break-even ROAS is used in DataGlass.
DataGlass computes contribution rate per SKU from reconstructed order economics, then carries the resulting break-even ROAS through the ads surfaces: campaigns are shown against their own break-even line rather than a shop-wide average, and a Shopee campaign whose spend sits below break-even is flagged with the specific SKU mix responsible.
05/Sources
- [1] Shopee Thailand — seller commission and fee schedule
Commission bands, transaction fees, and Shop Voucher mechanics — the deductions that separate gross margin from the contribution rate the break-even formula inverts.
- [2] Shopee Thailand — Free Shipping Programme
Documentation of the seller-funded share of the free-shipping subsidy, one of the deductions most often omitted when sellers compute break-even from gross margin.