Why ROAS is a vanity metric without COGS?
Many media buyers focus solely on ROAS (Return on Ad Spend) reported by Facebook or Google Ads. However, a 3x ROAS means nothing if the cost to manufacture and ship your product consumes most of your revenue.
To know if your campaigns are truly profitable, you must calculate your Break-Even ROAS and your Maximum Allowable CPA (Cost Per Acquisition). This simulator links your marketing metrics directly to your real-world product costs.
What is Break-Even ROAS?
Break-Even ROAS is the absolute minimum return on ad spend you need to achieve to cover both your ad costs and your product costs (COGS), resulting in zero profit and zero loss. If your Current ROAS is higher than your Break-Even ROAS, you are making a profit.
How do you calculate Maximum CPA?
The Maximum Allowable CPA is simply your Average Order Value (AOV) minus your Cost of Goods Sold (COGS). If you sell a product for $100 and it costs you $40 to source and ship it, your Max CPA is $60. If you spend more than $60 on ads to acquire a customer, you lose money.
How to use this Campaign Simulator?
Enter your daily ad budget, the average cost per click, and your website's conversion rate. Then input the retail price (AOV) and the total cost (COGS) of your product. The dashboard will instantly reveal your true Net Profit and the exact ROAS target you need to hit.