Seller profit tools

Advertising · ROAS and ACOS

Measure the return.
Respect the margin.

Translate attributed revenue and ad spend into ROAS and ACOS, then compare performance with your margin-based break-even point.

ROASACOSBreak-even

Return on ad spend

4.00×
ACOS25.0%
Profit after ads$1,500
Break-even ROAS2.50×
Break-even ACOS40.0%
Gross margin must already account for product cost and variable selling costs. Attribution quality, returns, overhead, and customer lifetime value are not modeled.

Relationship

ROAS and ACOS are reciprocals expressed differently.

$10,000 in attributed revenue from $2,500 in ads is 4.0× ROAS and 25% ACOS. With 40% pre-ad gross margin, break-even is 2.5× ROAS or 40% ACOS. Better attribution and repeat-customer value may justify different targets.

Open the verified methodology for formula provenance, assumptions, a worked example, and limitations.