ROAS on its own tells you very little. A 3x return is excellent on a 60% margin and a disaster on a 20% one. This simulator works out whether a campaign actually makes money, by comparing your return against the break-even point your margin sets.
Break-even ROAS is the number that matters
Your break-even ROAS is simply 100 divided by your gross margin percentage. At a 60% margin you need 1.67x to stand still. At 25% you need 4x. At 20% you need 5x — which is why thin-margin products are so unforgiving to advertise.
Anything above that line is profit. Anything below it is a campaign that generates impressive-looking revenue while quietly losing money on every order.
What to change when the numbers do not work
- Raise average order value. Usually the fastest lever. Bundles, volume pricing and a relevant upsell at checkout move this without touching your ad account at all.
- Improve conversion rate. Doubling conversion has exactly the same effect as halving your click cost, and you have far more control over your own landing page than over the auction.
- Lower cost per click. Tighter targeting and better creative, though there is a floor set by competition in your market.
- Improve margin. The most overlooked option. A few percentage points on price or supplier cost lowers the bar every campaign has to clear.
What this model leaves out
This is a single-purchase view. It does not account for repeat customers, and that matters: a business where buyers return several times can profitably run campaigns that look like losses on the first order. If you know your repeat rate, judge acquisition against lifetime value rather than the first sale alone.
It also excludes returns, payment processing fees, and the cost of your own time. Fold those into your margin figure for a more honest result.