Workflow
How to set a ROAS target that reflects your margin
A target ROAS copied from a forum post is a target for somebody else’s margins. Here is how to derive yours, and why one number cannot cover your whole catalogue.
1. Work out the margin you actually keep
Take the selling price excluding VAT. Subtract the unit cost, the shipping you bear and the payment fee — which is a percentage of the price, so calculate it rather than guessing at a round number.
What is left is your contribution per order. Multiply it by one minus your return rate for that product, divide by the price, and you have the returns-adjusted margin. That single figure is what every target below is built on.
2. Break-even ROAS is one divided by that margin
A 50% adjusted margin breaks even at 2.00×. A 40% margin needs 2.50×. A 25% margin needs 4.00×. This is the floor: at it you have worked for nothing, and below it every additional sale makes you poorer.
Notice how fast it moves. Two products that look similar on a shelf, with margins of 45% and 30%, need 2.22× and 3.33× — a difference no single account-level target can express.
3. Add the profit you want to keep
Decide what share of revenue you want to end up with — 10% is a common answer — and subtract it from the adjusted margin before dividing. Target ROAS is one divided by (adjusted margin minus target net margin).
At a 40% margin, breaking even needs 2.50× and keeping 10% of revenue needs 3.33×. If the target margin is close to the adjusted margin the required ROAS runs away to infinity, which is the arithmetic telling you the product cannot deliver that profit at that price.
Do the arithmetic here
The break-even ROAS calculator on this site takes your price, cost, shipping, fees, return rate and target margin and prints the two numbers, with the formulas shown. It runs entirely in your browser and asks for no email address.
4. Accept that the target is per product
One campaign-level target ROAS is a compromise between every margin inside it. It over-invests in the thin-margin products that clear it easily and starves the fat-margin ones that would have been worth more.
If your campaign structure allows it, group products by margin band so each group can carry a target that means something. If it does not, at least know which products are sitting below their own break-even inside a campaign that looks fine.
Or let it recalculate itself
Costs change, prices change, return rates change, and a target derived in January is wrong by March.
Opteno sidesteps the maintenance by reporting POAS, whose break-even is 1.00× for every product in every catalogue — no per-product target to derive, look up or keep current. The product row carries POAS beside ROAS and net profit, and is marked against that break-even automatically.
You can also set an automation on the number: a rule that checks POAS or net profit over yesterday or the last 7, 14 or 30 days, on a schedule from hourly to monthly, and prepares the change it implies. Anything that would touch Shopify or Google Ads waits for a person to approve it.
See which products are losing you money
Connect Shopify and Google Ads in under five minutes. From $14.99 a month, cancel whenever you want, and no change to your store or your campaigns without your approval.