Use the output as a threshold, not a forecast.
ROAS is not a universal target. A store with high gross margin can survive a lower ROAS than a store selling heavy, low-margin products. The useful threshold is derived from the contribution left after every non-advertising variable cost.
This calculator gives two thresholds: break-even ROAS, where order profit is zero, and target ROAS, where the order still produces the profit amount you specify. Use blended, platform and cohort data separately instead of assuming that one attribution view is exact.
Break-even ROAS formula
Pre-ad contribution equals net order revenue minus product cost, shipping, fulfillment, payment/platform fees and expected return loss. Break-even CPA is that contribution amount.
Break-even ROAS equals net order revenue divided by break-even CPA. Target ROAS replaces break-even CPA with contribution minus target profit. When contribution is non-positive, no paid acquisition level can make the order profitable without changing the offer.
A 60.00 order with 18.00 COGS, 6.00 shipping, 3.00 fulfillment, payment fees and an expected return allowance has only the remaining contribution available for advertising and profit.
Limitations to keep visible
- ROAS does not model cash timing, repeat purchase, customer lifetime value, incrementality or attribution error.
- Use a conservative return loss and include discounts actually granted, not the advertised list price.
- For subscription or repeat-purchase businesses, build a separate cohort LTV model before bidding against future value.
Frequently asked questions
Is break-even ROAS the ROAS I should target?+
No. It is the point where modeled profit reaches zero. A working target normally needs room for overhead, tax, attribution error and desired profit.
Should I include agency fees?+
Per-order or percentage media fees belong in platform fees. Fixed retainers are better handled in a monthly store-profit model.
What return number should I use?+
Use the net economic loss after refunds, lost product value, reverse shipping, handling and recoveries, multiplied by the expected return rate.