What ROAS Should a Dropshipping Store Target on Google Ads?
Published
Written by Christopher Krassnig, Founder & CEO of ZenoX Media. Answers every question here from the accounts ZenoX runs, not from theory.
The short answer
Break-even ROAS is 1 divided by gross margin, and a thinner margin needs a higher target. A 40 percent margin needs 2.5, but your own margin decides the right number. At ZenoX, we set the target above the store's break-even point and check the money left after supplier and shipping costs.
Calculate Break-Even First
Calculate break-even ROAS from gross margin before choosing a target. Divide 1 by gross margin written as a decimal. At a 40 percent margin, 1 divided by 0.4 is 2.5. That means you need 2.50 in sales for every 1.00 spent on ads just to break even. Use your own margin in the formula because a different margin produces a different break-even point.
Set the Target From Your Margin
Dropshipping often leaves less margin because supplier and shipping costs take part of each sale. A thinner margin pushes break-even ROAS higher, so use the same formula with your own lower margin. Choose a target above break-even when the campaign must make profit. Then watch actual profit as volume changes. We use ROAS to steer spend and judge the store by the money it keeps. If a higher target blocks profitable sales, lower it in small steps.
Related questions
Keep Going
- What Is a Good ROAS for an Ecommerce Store?
- How Much Should I Budget for Google Ads for a Dropshipping Store?
- Can I Run Google Ads Profitably on 20 to 30 Euros a Day as a Solo Dropshipper?
- Does Google Ads Actually Work for Dropshipping?
- Do I Need to Put My Supplier's Real Brand Name in My Google Shopping Feed If I'm Dropshipping?
Keep reading
More from the ZenoX team.
On the call, we look at your account live. If we can grow it, we will show you how. If we cannot, we will tell you that too, and point you at someone who can.
We work with brands serious about scale. If that is you, let's talk.
