RoasFloor

Questions from the bench

What is a good break-even ROAS?

There is no good break-even ROAS in the abstract—it is an output of your cost structure, not a target you choose. A 70% margin SKU breaks even near 1.4x; a 25% margin SKU needs 4.0x. The number that matters is whether your floor sits below what your channel realistically returns.

Does ROAS include COGS?

No. Platform-reported ROAS is revenue divided by ad spend and knows nothing about cost of goods, duty, payment fees, fulfillment, or returns. A 3x ROAS in Ads Manager can be a loss. Break-even ROAS bridges this gap by converting real per-unit costs into the ROAS threshold that Ads Manager numbers must clear.

How do tariffs change break-even ROAS?

Duty lands in COGS and compresses contribution margin. Break-even ROAS is one divided by contribution margin, so tariffs move the floor directly. The effect is non-linear: on a thin-margin SKU a few points of duty move the floor far more than the same points would on a fat-margin one.

Should I use break-even ROAS or break-even CPA?

They are the same fact in two units. Break-even ROAS is a ratio you set as a bid target; break-even CPA is a dollar amount you compare against actual cost per purchase. Use ROAS when your average order value moves around, CPA when it is stable.

What is the difference between break-even ROAS and target ROAS?

Break-even ROAS is a fact about your costs; target ROAS is a decision about your risk. The floor is where profit is exactly zero, so bidding at it means working for free. Target ROAS sits above the floor by a buffer you choose—1.5× to 2× the break-even figure is common practice.