Why is it important?

ROAS stands for “Return on Advertising Spend,” and it is a metric used to measure the effectiveness of an advertising campaign. The breakeven ROAS is the point at which the revenue generated by the campaign is equal to the cost of the advertising. In other words, it is the point at which the campaign is no longer losing money, but it is not yet generating a profit. It is the point where the return on investment is equal to the cost of investment.

How is it calculated?

Breakeven ROAS is calculated by dividing the revenue generated by the advertising campaign by the cost of the advertising.

The formula is Revenue per product / ( Revenue per product – Total costs per product) = Break Even ROAS

For example, if a product sells for €10 and costs you €6 between your Cost of Goods, Shipping Costs and Transaction Fees, your breakeven point ROAS would be 2.5. You need to keep your ROAS over 2.5 to ensure you’re maintaining a gross profit.