How to use Shopify ROAS calculator

The pass

Price and the costs left on the order. Open Shopify ROAS calculator and do it in this order.

1. Enter price, product cost, and the shipping you pay on that order.
2. Add fees if you know them. Leaving them out makes the target look easier than the payout.
3. Read break-even ROAS as price ÷ contribution. Contribution is what is left before ads.
4. Write the target on the brief. When the offer changes, including a bundle or a higher shipping threshold, run the new price and the new cost. Do not keep the old target.

The mistake that wastes the pass

Comparing a 3.0 campaign goal with a break-even of 1.5 and calling the gap profit. Fees, returns, and the ads that did not convert sit in that gap.

How you know it worked

The target on the brief uses today’s price, product cost, and shipping. A bundle or a new threshold means the old target is for a product you are no longer selling.

Type revenue you can reopen

Use store revenue for the dates and the products in the decision. An order export you filter yourself is the clean source. If you use platform-reported purchase value instead, write that you did, and do not mix it with store revenue in the same comparison. Discounts should already be out. Tax you do not keep should be out. Shipping charged to customers is in only if that is your revenue rule, written down.

Replace a rounded memory. If you believe the week was 'around 3,000 dollars,' open the export and type the figure. A break-even comparison can flip on a small revenue error when spend is large. Guessing revenue to save five minutes is how a cut decision gets made on a feeling with a decimal.

Type the spend the account charged

Read ad spend for the same dates, for the campaigns in the decision. Use the amount charged, after the account's own adjustments if those adjustments are in the export you trust. Do not add a hoped-for rebate. Do not subtract spend you wish you had not wasted. Wasted spend is still spend. It belongs in the ratio.

Shared spend needs a rule before you type it. Example rule, which is a rule you might choose and not a standard: split prospecting spend across products by the units sold in the window. If you choose it, write it and apply it the same way next time. A rule you change whenever the ratio looks bad is not a measurement. It is a story.

Divide, then say the scope in the same breath

Observed ROAS is revenue divided by ad spend. Say the window in the same sentence. A ratio without dates will be compared with a hurdle from a different year. If spend is 500 dollars and revenue is 900 dollars in an example, the ratio is 1.8 for those figures only. Do not carry 1.8 forward as a property of the product.

If you need cost per purchase instead of the ratio, divide ad spend by the purchases you counted in that same window. That cost is yours for those dates. It is not the placeholder formula. Prefer it whenever the export exists. The placeholder formula is what you use before the export exists, and you should retire it the day the export exists.

Build break-even from the unit, not from the campaign

Type the price a buyer pays for the unit you are judging, after the discount you are modeling. Type product cost from an invoice. Type shipping you pay from labels or a quote for the service you use. Type only fees you have read. Contribution is price minus product minus shipping minus those fees. Break-even ROAS is price divided by that contribution.

If contribution is zero or negative, stop. There is no meaningful break-even ROAS, because ads are not the thing that broke the unit. Price does not cover product, shipping, and fees even with free attention. Fix the unit. Do not ask the ROAS calculator to invent a hurdle by ignoring a cost until the ratio looks solvable.

Placeholders use decimals, and they stay labeled

If you sketch ad cost per purchase, convert every percent to a decimal before you use CPM divided by (1000 times CTR) divided by CVR. A click-through rate you write as 1 percent is 0.01 in the formula. A conversion rate you write as 1 percent is 0.01. Leave them as whole numbers and the sketch is off by orders of magnitude. The sketch will look like a precise cost. It is still a placeholder.

Write the three rates next to the cost and write the word placeholder. Do not call them typical, expected, or industry. Replace them with spend divided by purchases as soon as you have both counts. Keep the retired sketch in the note so nobody thinks the live cost 'came from the formula' when it came from the account.

Read the fee before you trust the hurdle

A payment fee you remember from a different plan or a different country does not belong in contribution. Plan, country, yearly versus monthly billing, and a third-party processor extra fee all change what you pay. Confirm published figures at https://www.shopify.com/pricing on the day you type them. Use /shopify-plan/ to keep the plan question separate from the ROAS question.

If the fee is unknown, compute break-even twice only if you must: once without the fee, labeled incomplete, and once with a fee you have actually read. Do not compute it with a fee you made up to be safe. A padded fee is still fiction. An incomplete hurdle is allowed to block a scale-up. It is not allowed to pose as a finished cost cap.

Replace each assumption in the open

List price, product, shipping, fees, revenue, and ad spend as document or assumption. Replace the assumption that moves break-even the most first. Usually that is product or shipping on a physical unit, and the ad export for the observed ratio. Recompute after each replacement. Write the old hurdle and the new hurdle.

Do not replace a placeholder CTR with a slightly nicer placeholder and call the sketch updated. A placeholder replaced by another placeholder is still a sketch. The only replacement that retires the sketch is observed spend and observed purchases, or observed revenue and observed spend if you are retiring it via the ratio instead of via cost per purchase.

Refunds change revenue if you say they do

The calculator will not remove refunds. If your revenue export is gross of refunds you have already paid back, reduce it or accept that ROAS is high relative to kept revenue. Write the choice. A comparison between a gross-revenue ratio and a net-revenue hurdle is sloppy. Match the definitions.

Do not apply someone else's refund rate to make the sheet look serious. If you have your own count, you may reduce revenue by an allowance you show as a multiplication, labeled as yours. If you do not, leave revenue unadjusted and write refunds omitted. Inventing a rate to look prudent is still inventing a rate.

Two checks before the note is done

Check the observed ratio by dividing revenue by spend yourself. Check break-even by subtracting product, shipping, and named fees from price, then dividing price by what remains. If contribution is 20 dollars and price is 50 dollars in an example, break-even ROAS is 50 divided by 20, which is 2.5. That example is only the check's shape. Your note uses your price and your contribution.

Then write one sentence that contains both objects. 'Observed ROAS for these dates is X. Break-even on this unit is Y, with these fees included.' If you cannot fill X and Y from documents or clearly marked assumptions, the how is not finished. Do not send a single number called ROAS to stand for both.

Retire the sketch on a date

Put a date on every placeholder sketch. After that date, the sketch cannot authorize a plan change. The replacement is an export. If the export is late, the decision stays not yet, and spend stays capped at whatever you already approved without the sketch. A sketch that quietly becomes 'the number we use' has failed this step.

Keep the formula written down so the next person uses decimals and does not treat the result as a bid. CPM divided by (1000 times CTR) divided by CVR, rates as decimals, output labeled placeholder. That sentence is the whole safety rule. Anything the sketch seems to prove beyond that sentence is something you added.

Shopify questions