Returned stock is restocked; refund, fee and both shipping legs are lost
Your estimate of sales the platform claims but didn't cause. Not a benchmark
Profit you want, as % of order value
Most you can pay ads for one sale
After ads, returns and fees
| Goal | Ads Manager ROAS | True ROAS | Max cost / order |
|---|
Money left per order = revenue kept after returns − product cost on kept orders − shipping − packaging − payment fees − return shipping.
Break-even true ROAS = order value ÷ money left. Ads Manager ROAS = true ROAS ÷ (1 − over-counting), so you can compare it directly with what the platform shows.
Only scale while you're above break-even. Assumes one product cost per order, restocked returns and no repeat purchases, so it shows the first-order floor.
I run paid social budgets in Toronto for brands like GO Transit, Lipton and Red Bull, and the first question every team asks is “what ROAS do we need?” Agencies work that number out for big brands. A small Ontario shop usually doesn't get it, like The Bakers Bar in Gravenhurst, a friend's store selling bath bombs, soaps, organic creams and infused cupcakes. A “3× ROAS” on a holiday post can look great while shipping costs and returns quietly eat the margin.
This version has been modified as a portfolio piece for my Shopify APM application. The example profiles are illustrative, not benchmarks or real store data.