From break-even to target
Target CPA = (Price − Costs per order) − Target margin × PriceWhat’s left of each sale after the product, shipping and fees pays for the ads. Keep part of it as profit, and the rest is the most an order may cost in ads: the target CPA.
Turning it into a ROAS
Target ROAS = Price ÷ Target CPAAd platforms report ROAS, so the target is easiest to use as one number: above it, the campaign makes at least your margin; between break-even and target it makes money, but less than you want.
Use it per brand, not as a rule of thumb
A 3× ROAS can be excellent for one product and a loss for another. Work the target out from each brand’s own prices and costs, and update it when costs change.
Questions
What target margin should I use?
The share of the price you want to keep as profit after ads. Many stores start with 10–20% and adjust once they see real results.
Why can’t my target be reached?
If costs per order plus the margin you want take up the whole price, no ROAS gets there. Lower costs, a higher price or a lower target margin fixes it.
Does it include refunds?
Yes, if you enter a refund rate: refunded sales are taken off before the margin is worked out.