Why is my campaign losing money at a 2x ROAS?

Because a 2x ROAS only works if gross margin is above 50%. At 40% margin, a 2x ROAS returns 80 cents of gross profit for every dollar of ad spend, so the campaign loses money while the dashboard looks acceptable.

Should gross margin include shipping?

Yes. Use contribution margin: revenue minus cost of goods, shipping, packaging and payment fees. Using cost of goods alone flatters every campaign.

What is a realistic conversion rate for a Shopify store?

Most e-commerce sites convert between 1% and 3%, varying widely by category and price point. Use your own current rate rather than a benchmark, and model what a realistic lift is worth.

My campaign is profitable but my business is not. Why?

Usually overheads or another unprofitable campaign. A single-campaign view misses both. Blended MER, total revenue divided by total ad spend, reflects the business.

Campaign Profitability Calculator

A worked example

This is the campaign that starts every awkward conversation. It looks fine on the dashboard and it is quietly losing money.

Campaign	Value
Ad spend	$5,000
Cost per click	$1.20
Clicks	4,167
Conversion rate	2.2%
Orders	92
Average order value	$95
Revenue	$8,708
ROAS	1.74x
Gross margin	55%
Gross profit	$4,789
Net profit after ad spend	-$211

A 1.74x ROAS and $8,708 of revenue, and the campaign is $211 down. At 55% margin the breakeven point is 1.82x, so 1.74x was never going to work. Nothing in Ads Manager tells you that, because Ads Manager has never seen your cost of goods.

The fix is rarely "spend less". Getting cost per click down to $1.05 or conversion rate up to 2.4% both turn this campaign profitable without touching the budget.

How the maths works

clicks = ad spend / cost per click

orders = clicks x conversion rate

revenue = orders x average order value

net profit = (revenue x gross margin) - ad spend

Four multiplications and one subtraction. The reason most brands do not run it is not difficulty, it is that gross margin lives in a spreadsheet somewhere and ROAS is on the screen already.

Where people get this wrong

Judging a campaign on ROAS alone

ROAS is a ratio of revenue to spend. It knows nothing about what the product costs you. Two brands can both run at 2.5x and one is thriving while the other is going backwards. Margin is what separates them.

Forgetting that cost per click drifts

CPC creeps up as creative fatigues and as you push into colder audiences. A campaign that was profitable at $1.05 can quietly cross into a loss at $1.30 without anything visibly breaking. Rerun this monthly, not once.

Using the platform's conversion rate

Use the conversion rate your store reports for that traffic, not the platform's. Meta counts conversions it believes it influenced across a long attribution window. Your store counts orders.

Blaming the ads for a site problem

If the maths only works at a conversion rate you have never hit, the campaign is not the problem. Fixing a 1.6% conversion rate is usually cheaper and more permanent than trying to buy your way out of it with better targeting.

Common questions

Why is my campaign losing money at a 2x ROAS?: Because 2x only works if your gross margin is above 50%. At 40% margin, a 2x ROAS returns 80 cents of gross profit for every dollar spent. The campaign is working exactly as designed, the design is just unprofitable.
Should gross margin include shipping?: Yes, if you are paying for it. Use contribution margin: revenue minus cost of goods, shipping, packaging and payment fees. Cost of goods alone flatters every campaign you run.
What is a realistic conversion rate for a Shopify store?: Most e-commerce sites sit somewhere between 1% and 3%, and it varies enormously by category and price point. Rather than chase a benchmark, use your own current rate here and model what a realistic lift is worth.
My campaign is profitable but the business is not. Why?: Almost always overheads or a second unprofitable campaign. This calculator looks at one campaign in isolation. Blended MER, total revenue divided by total ad spend, is the number that reflects the business.

Last reviewed 4 September 2026.

Campaign profitability calculator

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