Break Even ROAS for Car Care Products in New Zealand: The Number to Beat

What Break-Even ROAS Actually Means

Break-even ROAS is the minimum advertising return an order must generate for its revenue to cover every included variable cost, including the advertising spend itself. It is an order-level threshold, not a guarantee of business-wide profitability. Fixed costs such as rent, salaries or software remain outside the calculation unless you deliberately allocate them.

The formula is: break-even ROAS = revenue ÷ (revenue − variable costs excluding advertising). Those costs may include product cost, payment fees, fulfilment, packaging and expected returns. Keep the revenue and cost basis consistent. For New Zealand stores, decide whether both are GST-inclusive or GST-exclusive; GST in New Zealand is charged at a rate of 15% (Inland Revenue (Te Tari Taake): https://www.ird.govt.nz/gst) (Source: Inland Revenue (Te Tari Taake)).

Profit ROAS is the ROAS actually produced by a campaign or order: revenue ÷ advertising spend. Break-even ROAS tells you the floor; profit ROAS tells you what the spend delivered. If profit ROAS is below the break-even threshold, the order loses money on the included costs. If it is above, it produces a contribution after advertising, before any excluded fixed costs. Use the break-even ROAS calculator to structure the threshold before assessing campaign performance.

Build the Number From Your Contribution Margin

Start with the contribution margin available to pay for advertising. For each order, record the revenue actually collected after discounts, then subtract product cost, packaging, fulfilment, payment fees and the expected cost of returns. Include return shipping, refund fees or unsellable returned stock where they apply. Cancelled orders contribute no revenue; returned orders should be handled consistently with the revenue basis you use.

Keep tax treatment consistent across every input. GST in New Zealand is charged at a rate of 15% (Inland Revenue (Te Tari Taake), GST); use either GST-inclusive or GST-exclusive revenue and costs, and label the choice. Your small input table can then produce contribution dollars before advertising. Break-even ROAS is revenue divided by the contribution dollars available for ads. Check the result in the break-even ROAS calculator (Source: Inland Revenue (Te Tari Taake)).

How to Read Platform Numbers Carefully

Platform-reported ROAS is attributed revenue divided by ad spend. It is useful for campaign decisions, but it depends on the platform’s attribution model and reporting window: a 7-day click window may credit an order that another system assigns to email, direct traffic or another campaign. MER, also called blended return, divides total store revenue by total advertising spend. It is better for channel-level or whole-business checks because it does not rely on one platform claiming the sale, but it can hide which campaigns are efficient.

Contribution margin shows what remains after product and other variable order costs, before or after advertising depending on the definition. Profit goes further by including the costs needed for the chosen profit measure. Use attributed ROAS to manage campaigns, MER to judge the combined advertising channel, and contribution after advertising or net profit for business decisions. For the latter, use realised delivered-order revenue rather than platform-attributed revenue. ORVX tracks MER and attributed ROAS separately, then reports contribution after advertising and profit by product and collection. A break-even ROAS calculator can show the threshold, but the decision still depends on which level you are managing.

New Customers and Repeat Customers Need Different Targets

A new customer and a repeat customer can carry different economics. The first order must usually recover acquisition spend without assuming the buyer will return. A repeat order may have no new acquisition cost, so its contribution can be materially higher. That does not make an unprofitable first order acceptable by itself: the difference is a customer-level investment decision, not a reason to ignore cash requirements.

Include future value only when your own data supports it. Use delivered orders, not cancelled or returned orders, then apply observed repeat rates and contribution after product costs, fulfilment, refunds and other variable costs. Do not count a hoped-for second purchase, an untested subscription, or revenue that has not been collected. A store with no reliable repeat history should use first-order break-even ROAS.

Act on first-order break-even ROAS when cash is constrained, retention is uncertain, or you need a clean campaign rule. Use customer-level profitability when cohorts show repeat behaviour consistently. Use blended profitability when deciding whether the whole acquisition programme is sustainable across new and returning customers. ORVX shows customer-level profitability and repeat behaviour alongside product and collection contribution, so these measures can be compared without treating them as interchangeable.

Reading the Worked Example

Read the worked example from left to right. The revenue line is the amount actually collected for the order after the example’s stated discounts and adjustments. Treat this as store revenue, not as the advertising platform’s attributed-sales figure.

Then identify each variable cost shown in the example, such as product cost, payment or fulfilment costs, shipping, refunds or returns, and any other included cost. Subtract these from revenue to leave the contribution available for advertising. This is the amount the order can spend on ads before its contribution reaches zero.

The resulting break-even ROAS is calculated by dividing the order’s revenue by that contribution available for advertising. Read it as the minimum return required for the order to cover the costs included in the example. A reported ROAS above that threshold indicates the attributed revenue clears those included costs; a result below it does not. The threshold is specific to the example’s revenue and cost treatment, so changing either changes the calculation.

Set a Campaign Target You Can Operate

Turn break-even ROAS into a working target by adding room for volatility, testing and profit. For illustration only, if a campaign breaks even at 2.5 ROAS, a 3.0 target gives the campaign a defined operating goal rather than treating 2.5 as success. Use the same realised-revenue and cost definitions in both calculations; otherwise the comparison is misleading. The break-even ROAS calculator can establish the starting point.

Set a fixed review routine, such as checking each campaign weekly alongside delivered-order revenue, returns, contribution after advertising and total store MER. Attributed ROAS helps decide where to adjust media; MER shows whether advertising is working across the store. Neither measure, by itself, explains a poor product margin or an expensive delivery problem.

• At or above target: consider scaling only when contribution after advertising remains positive and returns or fulfilment costs are not worsening.
• Between break-even and target: hold, test creative or audience changes, and investigate the offer before increasing spend.
• Below break-even: reduce or stop the campaign while checking whether price, bundle economics, shipping cost, discounts or fulfilment are the real constraint. Fix those inputs before judging media alone.

Break-even ROAS is a cost model, not a universal campaign benchmark. Use the completed calculation to see the minimum return required for the order economics you have entered, then compare it with the platform measure that matches the decision: campaign optimisation for attributed ROAS, channel control for blended return, and commercial planning for contribution and profit.