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.
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