What break-even ROAS is
ROAS (return on ad spend) is the revenue your ads bring in divided by what they cost. A ROAS of 3 means $3 of sales for every $1 of ads. Break-even ROAS is the level at which ads exactly pay for themselves once the product, shipping, fees and returns are paid. Below it, every sale from ads loses money, even though the ad platform may report a "positive" return.
Break-even ROAS = retail price ÷ break-even CAC
Target ROAS = retail price ÷ (break-even CAC − retail × target net margin)
Worked example
The starting values describe a product costing $8.00 and sold for $20.00. After costs and fees each order leaves $10.52, so the ads can cost up to that much per sale: a break-even ROAS of 1.90. To keep a 15% net margin the ads must do better: a ROAS of 2.66.
Why margins decide your ROAS target
Break-even ROAS rises steeply as margins shrink. A product that keeps half its price after costs breaks even at a ROAS of 2; one that keeps a quarter needs 4; one that keeps a tenth needs 10, which almost no campaign sustains. This is why a cheap product with a thin markup is hard to sell with paid ads, however good it looks: the ads have to perform unrealistically well just to break even. A higher retail price or a bundle lowers the ROAS you need far more than any ad-account setting.
Reading ROAS in your ad account
Ad platforms attribute sales with their own windows and models, so the ROAS they report is an estimate and is often generous. Check it against your store: total revenue for the period divided by total ad spend. If that "blended" ROAS sits below your break-even ROAS, the business is losing money on paid traffic, whatever an individual campaign shows.
ROAS or CAC?
They are two views of the same limit. ROAS is the number ad platforms show you; break-even CAC is easier to compare between products and channels. Product Score reports break-even CAC for every product it scores and compares it with channel benchmarks; divide the retail price by it to get the break-even ROAS. See it on real products in the scored niches.