Does Each Product Need Its Own Break-Even ROAS?

Take two products that both sell for $50.

Product A costs $20 from the supplier. Add $6 shipping, $2 in payment and app fees, and $2.50 for refunds. That leaves $19.50 before ads, a 39% margin. Break-even ROAS is 1 divided by 0.39, so 2.56.

Product B costs $30 from the supplier, with the same shipping, fees and refunds. That leaves $9.50, a 19% margin. Break-even ROAS is 5.26.

Now say both products show a ROAS of 3.5 in your products report. On a $50 sale, that means about $14.29 in ads. Product A keeps $5.21 per sale. Product B loses $4.79 per sale. Same price, same ROAS. One makes money and one burns it.

That is the problem with one target for the whole account. A 3.5 target is only safe for products with a break-even under 3.5. And the account ROAS is a blend of every product, so it cannot tell you which side of its line each one sits on.

Do the math for every product. A sheet with five columns is enough: price before tax, supplier cost, shipping, fees, refunds. Price minus the rest is your margin before ads. That margin is also your max cost per sale, the most one sale can cost you in ads before you lose money.

Then group them. You do not run a campaign per product. Most products get too few sales on their own for Google's bidding to learn from. Our rule of thumb is about 30 sales in the last 30 days before a campaign gets a target ROAS.

So tag each product with a margin tier. Merchant Center gives you five free tags for this, called custom labels (custom_label_0 to custom_label_4). Three tiers is plenty. For example: thin (under 25%), standard (25 to 40%) and high (over 40%). Base each tier's break-even on its thinnest margin. That is the highest line in the tier, so a target at or above it sits over every product's line on paper.

On paper is not a promise, though. A target ROAS is an average for the whole campaign. Google says some sales will come in above it and some below. So a product can still run under its own line inside a tier that hits its target. That is why you check each product, below.

One catch. Asset groups in one Performance Max campaign share the same budget and the same target ROAS. So a tier that needs its own target needs its own campaign. Split a tier out only once it can get about 30 sales a month. Set its target a bit under the ROAS it really made in the last 30 days, and never under its break-even.

Adriaan Dekker, a Google Ads freelancer, makes the case for a different fix in a LinkedIn post. His fix is POAS, which means profit on ad spend. You send Google the profit on each order instead of the revenue. Then break-even is 1.0 for every product, and one target can cover the whole catalog.

He is right, with one condition. That 1.0 only holds if the profit you send takes out every cost of the sale: product, shipping, fees and refunds. Take out only the product cost and a 1.0 still loses money, because shipping and fees eat the rest. He names the practical catch himself: you need the cost of every product inside the value you send Google for each sale, through a tool or your own setup. Google's cart data feature can also pull cost of goods from your Merchant Center feed, but Google describes that as profit reporting, not as a way to bid.

Our take: POAS is the cleaner fix when your costs are correct and stay current. In dropshipping, supplier prices and shipping move often. A wrong cost feeds Google a wrong profit, and it bids on that. Margin tiers are easier to keep right, and you can read them in a minute. Either way, each product still has its own break-even. POAS just builds it into the number you send.

Once the campaigns run, open the products report and read each product's ROAS next to its own break-even. Not next to the account average.

Above its line: leave it alone, and give it more room if it sells. Below its line after learning, with tracking working and a clean feed: fix the price, the offer or the product page first. If you cannot, cut it. Write each product's break-even down before you launch, so you are not inventing a line when you are already losing money.

You can run the numbers in our free dropshipping profit checker and Google Ads ROAS calculator on zenoxmedia.com/tools.

Want someone to check your margin tiers? Post them in our free Google Ads eCom Lab on Skool. We run it, so weigh that. It has 1,600+ members and a weekly Google Ads question thread. Once a store spends at least €10K a month on ads, our agency team can run the account for you.