Case 1: Lower margin apparel store
An apparel store records an $85 average order. After discounts and expected returns, net revenue is $76. Product, fulfillment, shipping and payment costs total $49, leaving $27 before advertising. Break-even ROAS is $76 ÷ $27, or 2.81x. To retain $8 per order, allowable ad cost falls to $19 and target ROAS rises to 4.00x.
This example shows why using the list-price AOV would be misleading. Returns and discounts reduce revenue before media efficiency is evaluated.
Case 2: High-margin skincare bundle
A bundle produces $120 net revenue and $48 in variable costs, leaving $72 contribution before advertising. Break-even ROAS is 1.67x. Management wants $30 contribution after ads, so maximum CPA is $42 and target ROAS is 2.86x. At a 3% paid-click conversion rate, the target break-even CPC is $1.26.
Case 3: Subscription with repeat purchases
A subscription offer loses $4 on the first order after advertising but cohort data shows $38 of additional six-month contribution from retained customers. The business may accept first-order performance below break-even only if retention is stable, cash flow can support the payback period and acquisition cohorts are measured separately. Forecast lifetime revenue should not be treated as guaranteed.
Case 4: Platform ROAS versus blended MER
Two platforms report $140,000 of combined attributed revenue against $35,000 spend, suggesting 4x ROAS. The store records only $110,000 total revenue and spent another $10,000 on creators and production. Blended MER is $110,000 ÷ $45,000, or 2.44x. The difference does not automatically prove a platform is wrong, but it signals overlapping attribution and omitted marketing cost.
How to build your own case
- Choose a representative cohort and time period.
- Use net revenue after discounts and refunds.
- List variable costs per order.
- Calculate contribution before ads.
- Set the amount you want to retain after ads.
- Compare platform and blended performance.
Run your numbers in the break-even ROAS calculator, verify margin with the profit margin calculator, and consult our calculation methodology.