Method and assumptions
Break-even ROAS is determined by contribution margin before advertising, not by gross margin alone. Include every variable cost that increases when an order is placed.
Maximum CPA = order revenue - variable costs. Break-even ROAS = order revenue / maximum CPA. Break-even ACOS = maximum CPA / order revenue.
Common questions
Is a higher or lower break-even ROAS better?
A lower break-even ROAS means the order has more room to absorb advertising cost. Your target ROAS should normally be above break-even.
Does this include fixed overhead?
It focuses on per-order contribution. Allocate overhead separately when setting a profit target above break-even.
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