How Break-Even ROAS Works
Every order generates revenue, but that revenue also has costs attached to it. Product cost, fulfilment, shipping, payment fees and other variable expenses reduce the amount available to spend on customer acquisition.
The amount left after these non-ad variable costs is your contribution before advertising. That contribution determines how much advertising cost an order can absorb before reaching break-even.
The lower your contribution margin, the higher the ROAS typically required to reach advertising break-even. Higher contribution margins generally provide more room for customer acquisition.