Measure your ROAS — and find the break-even ROAS you actually need to be profitable.
Your ROAS
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Break-even ROAS = 1 ÷ product margin. Product margin = 100% − cost of goods − variable costs.
Product margin
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Your ROAS targets
Measure mode tells you the ROAS you actually got (revenue ÷ ad spend). Target mode tells you the ROAS you need to be profitable, based on your real unit economics.
A ROAS of 4 sounds great until your product margin is only 20% — then you lose money. Break-even ROAS = 1 ÷ product margin. The ladder shows the ROAS required to keep 10%, 20%, 30% or 50% net margin after ads. If a target exceeds your product margin, it is impossible — and the tool flags it.
Measure mode = the ROAS you achieved (revenue/spend). Target mode = the ROAS you need to hit a given profit, based on your costs and margin.
Per-order costs beyond the product: shipping, packaging, payment/transaction fees. As % of selling price.
If the net margin you want is higher than your product margin, no ROAS can deliver it — raise prices or cut costs first.
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