Set a target CPA and ROAS from your margins

There is no universal good number

Is a cost per acquisition (CPA) of ₹400 good? Is a return on ad spend (ROAS) of 3x good? It depends entirely on how much money you keep from each sale. You can calculate your own targets in a few minutes.

CPA

Cost per acquisition: ad spend divided by the number of results (sales, leads).

ROAS

Return on ad spend: revenue from ads divided by ad spend. 3x means ₹3 back for every ₹1 spent.

AOV

Average order value: what a customer pays on an average order.

Find your break-even

Take your AOV and subtract every cost of fulfilling the order: product, packaging, shipping, payment gateway fees and any marketplace or COD charges. What is left is your profit per sale before ads.

If a ₹1,500 order leaves you ₹700, then paying ₹700 in ads to get it means you make exactly nothing. That is your break-even CPA. Break-even ROAS is AOV divided by it: ₹1,500 ÷ ₹700 ≈ 2.14x. Any week below that loses money, however good it looks.

Leave room for profit

1. 1

   Profit per sale before ads

   AOV minus product, shipping, packaging and fees.

2. 2

   Set break-even

   Break-even CPA equals that profit. Break-even ROAS is AOV divided by it.

3. 3

   Choose the profit you want to keep

   Subtract it from break-even CPA to get your target CPA. Keeping ₹300 of ₹700 gives a ₹400 target.

4. 4

   Convert to ROAS if you prefer

   Target ROAS = AOV ÷ target CPA. Here, ₹1,500 ÷ ₹400 = 3.75x.

Adjust for returns, COD and leads

If customers reliably order again, you can afford to pay more for the first sale. Only do this with real repeat-purchase data, not hope.

For leads the idea is the same. If 1 in 10 leads becomes a customer worth ₹8,000 in profit, each lead is worth about ₹800 to you, so a cost per lead comfortably under that is healthy.