Know your numbers before you scale.
The first sheet we build for every brand: what one order leaves after costs, what you can pay for a new customer, and when extra spend stops paying.
Written by Pedram Ghozat, founder of MediaBoostr, and PedramAI · Updated
Why a good ROAS can still lose money
A founder sees a ROAS of 2.5 and asks if that is good. Without a few numbers of your own, the honest answer is that nobody knows.
All four come from the same gap: no profit number of the brand’s own to read the ad account against.
Start from one order
Every number we use is built on one figure: what a single order leaves after variable costs. Start from the order value without VAT or sales tax, then take off product cost, shipping, payment fees and an allowance for returns and discount codes.
From there the rest is short maths. Break-even ROAS is 1 divided by gross margin. Break-even CAC is the gross profit of the first order. We work it out per bestseller, because one store average hides products that lose money.
Then we read the whole business. MER and new-customer CAC come from total ad spend and Shopify, so they show what came into the bank. The full metric definitions are in our ecommerce KPIs guide.
Made-up numbers. $30 gross profit on $60 is a 50% margin: break-even ROAS 2.0, break-even CAC $30.
Six steps to read your own numbers
The order we build the sheet in, from one order to the decision to push spend or pull back.
Find the profit per order
Order value without VAT, minus landed product cost, shipping and packing, payment fees and a returns and discount allowance. What is left is gross profit per order.
Turn it into break-even
Break-even ROAS = 1 ÷ gross margin. Break-even CAC = gross profit per order. Below that line, an ad loses money on the first sale.
Set a contribution target
Contribution = revenue minus variable costs minus ad spend. Break-even keeps you alive; contribution pays the team, rent and profit. Pick the profit you want per order and work back to a target CAC.
First order vs lifetime
First-order gross profit is the safe ceiling for what you pay per new customer. Twelve-month gross profit (orders per customer times gross profit per order) is the stretch ceiling.
Read MER and new-customer CAC
MER = total revenue ÷ total ad spend. New-customer CAC = total ad spend ÷ new customers from Shopify, not from Meta. Platform ROAS stays a guide for which ads to keep.
Scale on the marginal customer
Look at what the extra customers cost, not the average. Marginal CAC = extra spend ÷ extra new customers. The average can look fine while the last dollars lose money.
Run your own numbers in the free ecommerce calculator. How budgets step up and down is on Meta account structure.
Six numbers on one page
Everything here works in a free spreadsheet. One made-up month: $20,000 ad spend, $80,000 revenue, 800 new customers, 50% gross margin.
Made-up numbers. Contribution that month: 50% of $80,000 minus $20,000 = $20,000. Raising spend to $30,000 brought 250 more customers at $40 each, so those first orders lose $10 each.
Why one store-wide target misleads
Two made-up products from one store, both running at a ROAS of 2.5.
Made-up costs, not any brand’s. Meta’s campaign ROAS blends the two, so we read ROAS per product.
The rule we use: first-order break-even, measured on total ad spend against the first-order gross profit of all new customers. How far past it to push is the owner’s call, and it depends on proven repeat orders and cash.
Brands growing revenue without knowing the profit
If ROAS looks fine and the bank balance doesn’t, the profit sheet is the first thing we build.
Questions
What is break-even ROAS?
The ROAS at which an ad pays for itself on the first order. It is 1 divided by your gross margin after product, shipping, fees and returns. At a 50% margin it is 2.0; at 35% it is about 2.86.
What is a good ROAS for ecommerce?
There is no single good number. A ROAS that is profitable for one brand loses money for another, because margins differ. Work out your own break-even ROAS per bestseller and read results against that.
What is the difference between ROAS and MER?
ROAS is what an ad platform says its ads brought in. MER is total revenue divided by total ad spend across all channels. MER shows what came into the business; ROAS helps you pick which ads to keep.
How much can I pay to get a new customer?
The safe ceiling is the gross profit of the first order. If you have measured repeat buying, twelve-month gross profit is a stretch ceiling, but only with the cash to wait for those orders.
What is contribution margin?
Revenue minus variable costs minus ad spend. It is what is left to pay the team, rent and profit. Track it in dollars each month, next to revenue.
When should I stop scaling Meta ads?
When the extra customers cost more than one first order earns. Divide the extra spend by the extra new customers. If that marginal CAC stays above first-order gross profit for a full week, step the budget back.