Glossary

Break-even ROAS

The ROAS at which ad spend exactly pays for itself, with no profit and no loss.

Formula

Break-even ROAS = 1 ÷ profit margin (as a fraction, before ad costs)

Example

If 40 percent of each sale is left after product, shipping and fees, break-even ROAS is 1 ÷ 0.4 = 2.5.

Above it, the ads make money on the first order; below it, they lose money unless repeat purchases make up the difference. Knowing it turns "is a ROAS of 2 good?" into a yes or no.

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