Method · free to read
Unit economics: the path to break-even ROAS
Steps 1 to 3 · from price to gross profit
- Start with average order value including VAT, then convert to net (divide by 1.19 in Germany).
- Subtract cost of goods including packaging and import: landed cost, not the ex-works price.
- Subtract shipping and fulfilment: postage, pick and pack, packaging material, pro-rata warehousing.
Steps 4 to 6 · the forgotten line items
- Payment costs: 1.5 to 3 % depending on mix. PayPal and invoice cost more but convert better.
- Price in returns: return rate times (shipping both ways plus refurbishment plus value loss).
- Support and overhead share: realistically 1 to 3 euros per order, more for products needing explanation.
Step 7 · the break-even ROAS
- Contribution margin before marketing = net AOV minus all of the above.
- Margin rate = contribution margin divided by gross AOV. Break-even ROAS = 1 divided by margin rate.
- Example: AOV 79 euros, contribution 27 euros, rate 34 %, break-even ROAS 2.9. Anything below burns money, however good it feels.
What the number controls
- Scaling limits: the last budget tranche may fall to break-even, not below it.
- Target ROAS for day-to-day: break-even times a safety factor (typically 1.3 to 1.5).
- New customer ROAS separately: blended numbers hide whether ads acquire or subsidise existing customers.
This calculation is day one and two of our free audit: we run it with your real numbers, including the line items missing from a gut feeling.
What happens next
- 1
Fill in the form
Five fields, two minutes: company, shop, revenue range, platform, what is going on.
- 2
20-minute intro call
We find out whether this fits. Shops on our decline list get a decline, not a pitch.
- 3
Phase C starts
Seven days later you have your baseline, break-even ROAS and the three biggest leaks in euros. Then you decide.
No contract before Phase C. Reply within 24 hours on business days.