How it is calculated
- Profit per unit before ads = payment (price + customer shipping) × (1 − fee rate − other cost rate) − cost − courier − packaging
- Pre-ad margin = profit per unit before ads ÷ payment
- Break-even ROAS = 100% ÷ pre-ad margin; below it, more ads mean more losses
- Target ROAS = payment ÷ (profit before ads − payment × target net margin)
- Max CPA(ad spend you can afford per sale) = profit before ads − target profit; max CPC = max CPA × conversion rate
Worked example
With a price of 29,900 KRW, cost 12,000 KRW, fees 5.5%, other 1.5%, courier 3,300 KRW and packaging 500 KRW, profit before ads is 29,900 × 0.93 − 15,800 = 12,007 KRW, a 40.2% margin. Break-even ROAS is about 249%, and keeping 10% after ads needs a ROAS of about 332%.
| Pre-ad margin | Break-even ROAS | Max ACoS |
|---|---|---|
| 50% | 200% | 50% |
| 40% | 250% | 40% |
| 30% | 333% | 30% |
| 25% | 400% | 25% |
| 20% | 500% | 20% |
| 10% | 1,000% | 10% |
FAQ
Is a ROAS of 500% always profitable?
No. A product with a pre-ad margin below 20% loses money even at 500%. The lower the margin, the faster break-even ROAS climbs.
How do ROAS and ACoS differ?
ACoS = ad spend ÷ ad sales, the inverse of ROAS. ROAS 400% = ACoS 25%. Amazon uses ACoS; Korean marketplaces mostly use ROAS.
Why does ad-report revenue differ from real profit?
Ad reports usually count gross payments and may include returns, cancellations or overlap with other campaigns. Decide based on profit from actual payouts.
Should I stop ads that miss break-even?
Some strategies accept a loss on the first sale, such as gathering early reviews or products with strong repeat purchase. Even then, set a cap on how much you are willing to lose.
Related: How to calculate break-even ROAS