How breakeven ROAS is calculated
Break even is the point where the margin on what you sell covers what you paid to sell it. Revenue times contribution margin minus spend equals zero, so revenue divided by spend equals one divided by margin. That is your breakeven ROAS, and it is the same equation the other calculators use when they write it as selling price divided by profit before ads.
Why the close rate changes the answer
In a shop the conversion and the sale are the same event. In a business that sells work the conversion is a form or a phone call, and between that lead and the money sits your close rate. The most you can pay for a sale is job value times margin. The most you can pay for a lead is that number times your close rate. At a 30 percent close rate the two are 3.33 times apart.
What the ad account will show you instead
If you entered a single flat value per lead, the Conv. value / cost column is that assumption divided by your spend, not your return. Google defines the column as total conversion value divided by total cost of all ad interactions, and tells you a flat dollar figure belongs there when you sell one kind of item at the same price. Importing offline conversions replaces the guess with what the job was worth.
Questions people ask
about this number.
WHAT IT MEANS
WHAT MOVES IT
There is no universal number. Breakeven ROAS is one divided by your contribution margin, so a business on a 35 percent margin breaks even at 2.86 and one on 12 percent breaks even at 8.33. A benchmark borrowed from somebody else tells you nothing about your account.
The ROAS itself is the same: one divided by your contribution margin. What changes is the ceiling per conversion. In a lead generation account the conversion is a lead, not a sale, so the most you can pay for one is your job value times your margin times the share of leads that become paid work. Skip that last multiplication and you overstate the ceiling by one divided by your close rate.
Only if the conversion values in your account are real revenue. Google defines the column as total conversion value divided by total cost of all ad interactions, so if you entered one flat value per lead the column divides that assumption by your spend. Importing offline conversions replaces the guess with what the job was actually worth.