A reported return on ad spend can look healthy while the business loses money because ROAS ignores gross margin, discounts, fulfilment, returns, payment costs, agency or production cost and the difference between new and repeat demand.
Start with contribution, not the platform dashboard
Revenue is not profit. Build a simple contribution view from net revenue after discounts and returns, minus cost of goods, fulfilment, payment fees and the variable costs required to generate the order. Only the remaining amount is available to pay for acquisition and overhead.
Separate new-customer economics
Blended ROAS can be lifted by existing customers who were already likely to buy. Compare new-customer acquisition cost with the contribution expected from a new customer over a time period the business can actually finance.
Use break-even as a boundary, not a target
Break-even ROAS describes the point where an order stops contributing after variable costs. A sustainable target normally needs room for overhead, volatility, cash timing and reinvestment.
The decision to make next
Calculate a contribution-based allowable CAC, compare it with new-customer CAC and decide whether the next test should change media, offer, creative, journey or retention.