Break-Even ROAS
Break-even ROAS, or Return on Advertising Spend, is the point at which your advertising efforts generate enough revenue to cover the cost of your advertising investments. In other words, it's the minimum Return on Advertising Spend (ROAS ) required to ensure that your advertising campaign breaks even and doesn't result in a loss.
For example, if you spend $1,000 on advertising and your break-even ROAS is 2, it means you need to generate $2,000 in revenue from your advertising efforts to cover the $1,000 ad spend.
Achieving a break-even ROAS is important because it ensures that your advertising is at least paying for itself. To make a profit, you would aim for a ROAS higher than your break-even point.
How to use the Break-Even ROAS Calculator
The equation to calculate break-even ROAS is as follows:
1 / Average Net Profit Margin
However, to find Average Net Profit Margin for this calculator, a few steps must be taken:
Find the Average Cost of Goods Sold (COGS) Per Product
(Total COGS/Number of Products)Find the Average Revenue Per Product
(Total Revenue/ Number of products)
Calculate Average Net Profit Per Product
Avg Net Profit Margin = ( Average Revenue Per Product - Average COGS Per Product )
Calculate Average Net Profit
Avg Net Profit Margin = (Avg Net Profit / Revenue) x 100
It's essential to calculate these values diligently, as assuming any of your input numbers, like COGs (cost of goods), can potentially distort the data.
You can use the calculator by entering the Average COGS Per Product and the Average Revenue Per Product Below:
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