Break Even ROAS for Dropshipping Home Goods in Singapore: The Number to Beat

What Break-Even ROAS Actually Measures

Break-even ROAS is the revenue-to-ad-spend ratio required for an order to cover its variable costs. For a Singapore home goods dropshipping store, those costs can include the supplier’s product charge, fulfilment and shipping, payment processing, Shopify or other platform fees, applicable tax, refunds, returns and other costs that rise when an order is placed. If GST applies to your sales, the current GST rate in Singapore is 9%, according to IRAS; account for it consistently in the revenue and cost figures used.

A break-even ROAS of 2.5 means each S$1 of advertising must produce S$2.50 of eligible revenue before the order economics reach zero contribution after those costs. Below that ratio, advertising leaves a variable-cost shortfall; above it, advertising contributes something toward profit. The threshold normally excludes fixed overheads such as salaries, software subscriptions, rent and accounting fees. If you want to recover those costs too, label the result clearly as a fully loaded or company break-even ROAS rather than the variable-cost threshold. You can test the inputs with the break-even ROAS calculator.

Build the Calculation From Your Contribution Margin

Start with contribution margin before advertising: the SGD revenue left after variable order costs, but before ad spend. Use the same basis for both revenue and costs. The formula is: break-even ROAS = 1 ÷ contribution margin percentage. Contribution margin percentage = (realized revenue − variable costs) ÷ realized revenue. For a 30% margin, the threshold is 1 ÷ 0.30 = 3.33.

Include product cost, supplier-to-customer shipping, payment processing, platform or transaction fees, packaging, and expected non-recoverable return or refund costs. Exclude fixed salaries, rent, and software unless you are calculating a broader business break-even point. Apply discounts before calculating revenue: a SGD 100 item sold for SGD 85 has SGD 85 of revenue. Remove cancelled orders and treat refunds against the revenue they reverse.

Use GST consistently. Singapore’s current GST rate is 9%, according to IRAS. If you can recover input GST, calculate using prices excluding GST; if you cannot, include the GST you actually bear as a cost. Convert supplier costs, fees, and revenue into SGD using the same order-level basis, and include FX charges. The break-even ROAS calculator applies this arithmetic without mixing currencies (Source: Inland Revenue Authority of Singapore).

How to Read the Worked Example

Read the worked example from left to right. The selling price is the order revenue used in the calculation; product cost, supplier shipping, payment fees, and any other variable fulfilment costs are deducted from it. Check whether the figures include GST. Singapore’s current GST rate is 9%, according to the Inland Revenue Authority of Singapore, so an order total that includes GST should not be mixed with costs recorded excluding GST (Source: Inland Revenue Authority of Singapore).

The remaining amount is the contribution available for advertising. Divide revenue by that contribution to get the threshold shown in the example. For instance, if an order produces SGD 40 of contribution from SGD 100 of revenue, the break-even ROAS is 100 ÷ 40 = 2.5x. At 2.5x, advertising consumes the full SGD 40 and the order contributes nothing after ads. Above it, the order has positive contribution; below it, the order loses money before fixed overhead.

That is order-level break-even, not whole-business break-even. Rent, salaries, software, storage, and other fixed costs still require coverage across all orders. Use the threshold to judge unit economics; use total net profit and cash flow to judge whether the business is covering itself.

Platform ROAS Is Not Always Profit ROAS

A platform’s ROAS is usually attributed purchase value divided by ad spend. Its result depends on the attribution window, the purchase-value definition, and whether the platform recognises a cross-device order. It may count an order later cancelled or returned, and may include or exclude discounts, shipping, or tax differently from Shopify or your finance system.

Use platform ROAS to assess how an ad account assigns credit, not as final profit evidence. Reconcile it with Shopify or finance-system revenue after cancellations and returns. For a store-wide view, compare total realised revenue with total ad spend using MER. ORVX calculates realised revenue from delivered orders only and reports attributed ROAS separately from MER, so you can check the inputs behind your break-even ROAS calculation.

New Customers and Repeat Customers Need Different Targets

New-customer and repeat-customer campaigns should not inherit the same ROAS target. For a first order, use immediate contribution break-even: if a delivered SGD 80 order leaves SGD 32 before advertising, SGD 32 of spend produces a 2.5 ROAS (80 ÷ 32) at the threshold. A campaign below that has not paid for its first order, even if some buyers may return.

A repeat-customer campaign can be judged on a customer-lifetime-value view when repeat behaviour is proven. Suppose first-order contribution is SGD 32 and a later delivered order adds SGD 24 after non-ad costs. Spending SGD 40 to acquire the customer across both orders can be justified by SGD 56 total contribution, although the first order alone was below immediate break-even. This is not permission to ignore cash flow: the store funds the gap before the repeat purchase arrives.

Use the immediate measure for cash protection, product or audience tests, and any segment without reliable repeat data. Use LTV only when customer-level results show repeat rate, timing, refunds and contribution consistently enough to support the assumption. ORVX shows customer-level profitability and repeat behaviour, using delivered orders rather than cancelled or returned revenue, so the two views can be compared without treating projected future sales as realised profit.

Set a Campaign Target You Can Act On

Turn the threshold into a target with room for measurement error, returns and day-to-day variation. If break-even ROAS is 2.0, a 20% safety margin makes the operating target 2.4 (2.0 × 1.2). Use that target for prospecting, where the first order must carry acquisition cost. Retention can use a separate lower target only when repeat-order contribution is proven and measured on delivered orders, not assumed future value. Set each campaign against its own economics rather than applying one store-wide number. Calculate your threshold before setting the target.

Change the lever that matches the failure. Below target with adequate click-through but weak conversion points to the landing page, offer or checkout; test those before raising bids. Strong conversion but insufficient margin calls for pricing, fulfilment cost, supplier terms or the product offer. Weak engagement calls for new creative or audience work. Reduce bids or spend when the economics are sound but acquisition is inefficient; scale only after performance stays above target across enough delivered orders. Use product- and collection-level contribution after advertising to decide whether to fix, test or stop a specific offer, rather than optimising on revenue alone.

Break-even ROAS is a financial threshold, not a universal campaign score. Calculate it from the costs of each Singapore order, verify the result against actual settled revenue and refunds, then use different targets where customer acquisition economics and repeat-purchase economics differ.