ROAS vs. profitability
Return on ad spend (ROAS) is revenue divided by ad spend. A 3x ROAS sounds great — but if your margin is 30%, you are losing money. That is why the most important number is break-even ROAS = 1 ÷ gross margin. Anything above it is profit; anything below it is a subsidy.
Max affordable CPA
Your maximum cost per acquisition is your average order value multiplied by your margin. If repeat purchases are common, use customer lifetime value instead to bid more aggressively than competitors who only count the first order.
Planning a budget backwards
Start from the revenue target, divide by expected conversion rate and average order value to get the traffic you need, then multiply by cost per click. This calculator does that math so you can sanity-check plans before you spend a rupee.