D2C Ecommerce Brands...
Calculate Your Exact Profitable ROAS
Step 1: Know your average product price:
For example, your product sells for $50.
But after VAT or sales tax, that number drops.
That's your actual starting point.
Every calculation from here builds on this number, so get it right first.
Step 2: Add up your true cost per unit
You need to add up your cost of goods, shipping from your supplier, transaction fees, pick-and-pack fees, fulfillment costs, and even your return rate.
On a $50 product, this can quietly eat up $9–10 before you've spent a single dollar on ads.
Step 3: Calculate your gross and net profit
Once you subtract your total cost from your selling price, you get your gross margin.
Then you set a net profit target per unit, say $7.
That number tells you exactly how much room you have for marketing.
Step 4: Set your ROAS and CAC targets
Your breakeven ROAS tells you the minimum return you need from every ad dollar just to stay alive.
Your CAC (customer acquisition cost) is what you can afford to spend to win a new customer.
Without these two numbers, your ad budget is just a guess.
Step 5: Factor in your customer lifetime value
A customer who buys once at $50 is one thing.
A customer who comes back and spends $150 over 12 months changes your entire math.
When you know you are 3, 6, 9, and 12-month LTV,
you can afford to spend more to acquire customers,
and beat competitors who only look at the first sale.