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A ROAS calculator that knows the second order exists
ROAS (return on ad spend) is revenue from your ads divided by what you spent on them. That tells you one thing: what it costs to buy a customer. It does not tell you what that customer is worth. This calculator works out both, doubling as a CPA calculator and a customer lifetime value calculator: you see your cost per acquisition, what a customer brings back over 12 months, how fast they pay off their own acquisition, and how low a front-end ROAS you can actually afford to run.
Built by Simon Jordan, co-founder of Icarus Digital Marketing, running Meta ads for restricted categories since 2016. The thinking behind it comes from operating real ad accounts, not from a benchmark report. See the case studies.
Step 1: what one order is worth to you
What a customer pays per order, on average.
What the products in that order cost you.
Postage, packaging, pick-and-pack per order.
Card or gateway fee, as a percent of the order.
Step 2: what a customer is worth over 12 months
Including the first order, so at least 1. A product reordered monthly is 12.
With 6 orders a year, a front-end ROAS of 0.31x still breaks even over 12 months, even though the first order alone would need 1.86x. The gap between those two numbers is what repeat purchases buy you.
Step 3: check a real campaign (optional)
Total spent on the campaign or period.
Attributed sales revenue for the same period.
Leave blank and we estimate it from revenue ÷ average order value.
This tool does arithmetic on the numbers you type. Nothing is stored or sent anywhere. The 12-month figures assume your reorder number holds, which is a retention job, not an ads job. Treat the output as the start of a real conversation about your numbers, not financial advice.
The ROAS calculation, written out
- ROAS
- revenue from ads ÷ ad spend
- Margin per order
- order value − product cost − shipping & fulfilment − payment fees
- First-order break-even ROAS
- order value ÷ margin per order
- 12-month customer value (LTV)
- margin per order × orders per customer per year
- Max CPA
- that 12-month customer value
- CPA
- ad spend ÷ new customers acquired
- Payback
- months of reorders until a customer’s margin covers their CPA
These formulas count the costs that scale with each order. Fixed overheads like rent and salaries come out of what’s left. The 12-month figures assume your reorder rate holds, which is what retention marketing is for.
Worked example: a store sells at a $60 average order with a $32.20 margin (product $18, fulfilment $8, fees $1.80). First-order break-even is 1.86x. But its customers place six orders a year, so one customer is worth $193.20 of margin over 12 months. That means the store can pay up to $193.20 per customer, and can run a front-end ROAS as low as 0.31x and still break even over the year. The same campaign judged on first-order ROAS alone would look like a disaster. Judged on what it is actually buying, it is fine.
Break-even ROAS at every margin
Everyone asks what a good ROAS is. This table is why nobody can answer without knowing your margin: it is pure arithmetic (break-even ROAS = 1 ÷ margin), and the answer moves fourfold across ordinary margin levels. These are first-order numbers, before repeat purchases make them all easier to clear.
| Margin per order | First-order break-even ROAS | What that means |
|---|---|---|
| 20% | 5.00x | $5 of revenue needed per $1 of ads |
| 30% | 3.33x | $3.33 needed per $1 |
| 40% | 2.50x | $2.50 needed per $1 |
| 50% | 2.00x | $2 needed per $1 |
| 60% | 1.67x | $1.67 needed per $1 |
| 70% | 1.43x | $1.43 needed per $1 |
| 80% | 1.25x | $1.25 needed per $1 |
So a 2.5x ROAS is profit for the 50%-margin store and a loss for the 30%-margin store, on the very same campaign numbers. That is the whole reason benchmark answers to “what is a good ROAS” are useless.
Front-end ROAS is the most overrated number in advertising
Obsessing over first-order ROAS is how amateurs read an ad account. In competitive categories, a comfortably profitable front-end ROAS is rare, and chasing one usually means starving the account of the spend it needs to acquire customers at all. The operators who scale repeat-purchase brands think in acquisition costs: what does a customer cost me, what do they buy over the next year, and how fast do they pay themselves off. Some of the biggest subscription brands deliberately lose money on every new customer for months, on purpose, because they know exactly what those customers are worth by month twelve.
The uncomfortable part: this only works if customers actually come back. The moment you pay more than one order’s margin for a customer, retention stops being a nice-to-have and becomes the thing holding the whole model up. Email, retargeting, and a product worth reordering are what turn a scary front-end number into a compounding machine. If you know your CPA and your 12-month customer value, you can be brave about everything in between. If you only know your ROAS, you are flying on one instrument, and it is the least informative one on the panel.
Common questions
How is ROAS calculated?
ROAS (return on ad spend) is revenue attributed to your ads divided by what you spent on them. $10,000 of tracked revenue from $2,500 of spend is a 4x ROAS. But notice what it measures: the first transaction only. It says nothing about whether those customers come back, which for most repeat-purchase businesses is where the actual money is.
What is a good ROAS?
There is no universal good ROAS, and the honest answer upsets people: for a repeat-purchase product, a ROAS below break-even can be excellent. What matters is what you paid to acquire a customer (CPA) versus what that customer is worth over time (LTV). A campaign running at 0.8x that acquires customers who reorder every month can be a far better campaign than a 3x that acquires one-time buyers, once you run the margins on both. Anyone quoting a good-ROAS benchmark without asking about your margins and reorder rate is guessing.
What is break-even ROAS?
Break-even ROAS is the ROAS at which a campaign neither makes nor loses money on the first order: average order value divided by the margin per order. It is worth knowing as a reference point. It is not a pass/fail line, because it ignores every order the customer places after the first one.
Is running below break-even ROAS bad?
Not necessarily, and for competitive spaces it is normal. In categories like supplements and wellness, a genuinely profitable front-end ROAS is rare. Established subscription brands knowingly lose money on a new customer for months because the reorders pay it back many times over. Running below front-end break-even is simply paying an acquisition cost. It goes wrong when 12 months of a customer’s margin still does not cover that cost, or when the payback takes longer than your cash can fund, which is why retention (email, retargeting, product quality) decides whether the same campaign is smart or reckless.
What are CPA and LTV, and why do they matter more than ROAS?
CPA (cost per acquisition) is what you paid for one new customer: ad spend divided by customers acquired. LTV (lifetime value) is what that customer is worth: for a 12-month view, margin per order times orders per year. The whole game of paid acquisition is CPA versus LTV. You pay the acquisition cost once; the customer keeps buying. A $100 first order from a monthly reorder customer is roughly $1,200 of revenue over the year, bought with one CPA. Front-end ROAS cannot see any of that.
Which costs should I include in margin per order?
Everything it costs to put one average order in a box: landed product cost, shipping and fulfilment, and payment processing. Some businesses add a per-order share of packaging inserts or expected refunds. Fixed overheads like rent and salaries are usually left out of the per-order margin and covered by total profit instead. Whichever way you do it, be consistent, and know which version of the number you are looking at.
How fast should a customer pay back their acquisition cost?
It depends on your cash, not on a benchmark. A payback of several months is fine if you have the reserves to fund growth while you wait, and dangerous if you do not, because scaling multiplies the front-end losses before the reorders arrive. The calculator shows the payback time so you can make that call with your own numbers.
Selling in a category most agencies won’t touch?
Icarus has run paid advertising for restricted categories since 2016: cannabis, CBD, kratom, vape, and others. If your customer economics work but your ads keep getting rejected or your accounts keep dying, that is the problem we exist for.