Find the minimum Return on Ad Spend (ROAS) your product needs just to break even — and the target ROAS needed to hit your desired profit margin.
Gross profit per unit is your price minus cost of goods minus other per-order costs — what's left to cover advertising and profit. Breakeven ROAS is your price divided by that gross profit, representing the return on ad spend where profit from ads is exactly zero.
ROAS needed for your target margin is calculated by first finding your target profit in dollars (price × target margin), then working out the maximum ad spend per sale that still leaves that profit, and expressing it as a ROAS ratio. Any ROAS above this target keeps you profitable at or above your goal.
Return on Ad Spend — total revenue generated divided by total ad spend. A 3x ROAS means $3 in revenue for every $1 spent on ads.
Breakeven ROAS is the minimum needed to avoid losing money on ads; target ROAS is the higher number needed to hit your desired profit margin on top of covering costs.
No — this calculates unit-level (per-order) profitability from ad spend only. Fixed business overhead needs to be covered separately from this per-unit margin.