Break Even ROAS for Gourmet Food in Australia: The Number to Beat

Every example and amount on this page is illustrative. It shows the method and is not a benchmark, a quote or advice.

What Break-Even ROAS Actually Measures

ROAS (return on ad spend) measures attributed revenue divided by advertising spend. A 3.0 ROAS means each dollar of ad spend produced three dollars of reported revenue. Break-even ROAS asks a narrower question: how much revenue must that ad spend generate to cover advertising plus every other variable cost attached to the sale?

If non-ad variable costs consume 60% of revenue, the remaining contribution before advertising is 40%. The break-even ROAS is therefore 1 ÷ 0.40 = 2.5. At 2.5 ROAS, contribution after advertising is zero, not profit. Use GST-consistent figures: business.gov.au states that GST is a tax of 10% on most goods and services sold or consumed in Australia, with the GST portion being one-eleventh of the sale price for registered businesses. Do not treat collected GST as store revenue (Source: business.gov.au (Australian Government)).

This threshold differs from the other numbers in your dashboard. Revenue measures sales volume; margin measures the percentage retained; profit measures dollars left after the costs included in your profit calculation, including fixed overhead where applicable. Break-even ROAS measures ad efficiency against variable contribution. A revenue target is right for planning sales volume, margin for pricing and product economics, and break-even ROAS for deciding whether paid acquisition is economically viable. You can check the arithmetic with the break-even ROAS calculator.

Build the Number from Every Variable Cost

Build the calculation from realised, GST-consistent revenue. business.gov.au says GST is 10% on most Australian sales; registered businesses collect the GST portion, which is one-eleventh of the sale price. If you are GST-registered, remove GST from both revenue and recoverable purchase costs. If not registered, use the customer amount actually retained. Apply discounts before calculating revenue, and include product cost, cartons and protective packaging, postage, payment processing, pick-and-pack fulfilment, and any per-order duties or taxes (Source: business.gov.au (Australian Government)).

In this example, the order contributes $43 before advertising, so the break-even ROAS is $90 ÷ $43 = 2.09. Income tax, rent, salaried labour, software and other fixed overheads are excluded; include them only in a separately labelled full-business profitability view. A break-even ROAS calculator helps test your own assumptions.

How to Read the Worked Example

Read the worked example from left to right. Start with the revenue line: this is the realised, GST-consistent sales revenue used for the calculation, not a gross order total that includes cancelled or returned orders. Next, identify the allowable costs listed beneath it. These are the variable costs that must be paid before advertising can be funded; use the example’s definitions and do not add fixed overheads or costs already excluded from the calculation.

The next line is contribution. It is the revenue left after subtracting those allowable costs, so it represents the amount available to absorb advertising spend. The example then converts that amount into the ROAS threshold by dividing revenue by contribution available for ads. The same result can be expressed as one divided by the contribution margin. A campaign at the resulting ROAS covers the included economics; below it, advertising consumes more than the available contribution. Check the arithmetic in the break-even ROAS calculator, then replace the example inputs with your store’s realised figures.

Read Platform Numbers Carefully

Platform-reported ROAS answers: “How much revenue did this platform receive credit for?” A platform may report attributed revenue against spend based on its attribution window. The window can include a defined period after a click or view, so two platforms may claim the same order, or assign it differently. Use this figure to compare campaigns inside the same platform and make short-term optimisation decisions, not to approve store-wide profitability.

Store-level break-even ROAS uses realised revenue after cancellations, returns and refunds, with GST treatment consistent between revenue and costs. business.gov.au states that GST is 10% on most Australian sales and registered businesses collect the GST portion, one-eleventh of the sale price. Mixing GST-inclusive platform revenue with GST-exclusive costs makes the required ROAS appear lower than it is. Use the break-even ROAS calculator to keep the basis consistent (Source: business.gov.au (Australian Government)).

For whole-store budget decisions, compare total realised revenue with total advertising spend: this blended MER avoids platform attribution overlap, while attributed ROAS helps diagnose channel performance. ORVX tracks MER and attributed ROAS separately, and includes refund value against revenue. Act on the store-level figure for profitability, MER for overall budget health, and platform ROAS for campaign management.

New Customers and Repeat Customers Need Different Hurdles

Treat new-customer and repeat-customer campaigns as different economic tests. A first-order campaign usually needs the initial order’s contribution after product cost, fulfilment, payment fees, discounts and advertising to cover the acquisition cost immediately. If a $100 campaign produces $200 of realised revenue but leaves only $70 after non-ad costs, it has not recovered its $100 acquisition cost, regardless of the reported ROAS.

A retention campaign can be assessed partly on repeat-purchase contribution because the customer has already been acquired. For illustration only, a $100 campaign that generates $250 in repeat-order revenue may be acceptable if those orders produce enough contribution after advertising. Use customer-level profitability and repeat behaviour to see whether that pattern exists, rather than judging the campaign on revenue alone.

Do not count future orders in today’s break-even calculation without stating the assumptions behind them. Treat expected repeat purchases as a separate scenario, with an explicit assumption for purchase rate, timing and margin; then compare it with realised results. Act on first-order economics when acquisition cash recovery matters, and on repeat contribution when retention performance is the question. ORVX shows both customer-level profitability and contribution after advertising.

Set a Target Above the Break-Even Line

Treat break-even ROAS as the floor, not the campaign goal. If your calculated threshold is 2.4, a 25% operating buffer produces a 3.0 target ROAS (2.4 × 1.25). Set that buffer for the profit you require, testing risk, attribution gaps and reporting uncertainty, not as a promise that every campaign will reach it. Review the buffer when returns, discounts or delivery costs change.

Use each measure for a different decision. Break-even ROAS tells you the minimum attributed return before advertising consumes the order’s contribution. Target ROAS adds profit and risk tolerance, so it is the appropriate campaign benchmark. Contribution per order is more useful when average order value or product mix varies: it shows the dollars left after advertising for each order. Blended store profitability is the right control for budget decisions across paid, organic, email and repeat sales, because it tests total realised revenue and costs rather than one platform’s attribution. Compare these views in a break-even ROAS calculator, then act on the measure that matches the decision.

Break-even ROAS is the minimum return required for an order to cover its advertising and variable costs under the chosen accounting assumptions. Use one consistent GST and tax basis, check the calculation against actual order economics, and keep the break-even threshold separate from the higher target required for sustainable profit.