What is your break-even ROAS?
Your break-even ROAS is the return on ad spend where an order neither makes nor loses money after product costs, fees and returns. Below it, every sale loses money. Enter your numbers to see your break-even and the ROAS you need to hit your profit target.
The formulaBreak-even ROAS = 1 ÷ contribution margin before ad spend. With a 48% margin before ads, break-even ROAS is about 2.08×.
Example: an $80 average order with 40% cost of goods and 12% shipping, payment and return costs leaves $38.40 per order before ads. Break-even ROAS is 2.08×; to keep 10% of revenue as profit, you need about 2.63× and can pay up to $30.40 per order in ads.