How to use the ROAS calculator in TrustAds to generate a figure for your rules
If you want to use ROAS as a metric in your automated rules, but are unsure about what figure to use, the ROAS calculator provides a handy guide to what ROAS you'll need to deliver profit.
What is ROAS?
If you're unsure about what ROAS is, check out our article here.
Accessing the ROAS calculator
Once you've logged in to your TrustAds account, head to the left hand menu: Extras > ROAS calculator
Here, you'll see two main inputs in the top box, with a box on the right hand side containing two columns for your outputs.
INPUTS
This is where you input your revenue and costs.
Revenue
Input the revenue you receive from either:
- Item
This would be the from sale of a particular product or service - you'd use this if you either sell all of your products/services at the same price, or you're running a dedicated campaign for a particular product or range with a fixed price.
- AOV
This would be the average order value (AOV) you receive from your sales. You'd use this if your campaign contains multiple items or price points.
Direct costs to fulfil
This is where you input the cost of fulfilling a sale, e.g. postage and packaging. This will be for either:
- Item
If you input the revenue for an individual item sale in the box above, here you should input the cost of fulfilling the sale of that item.
- AOV
If you input the revenue from your AOV in the box above, here you should input the average fulfilment cost across your orders.
Example
Say you're an e-commerce store owner that specialises in T-shirts, each one at the price of £20.
You would put an item value in the Revenue box of £20.
Let's say your fulfilment costs work out at £3.50 per t-shirt, you'd enter £3.50 into the Direct Costs to Fulfil box.
Tip: Even if all of your products are the same price, if you know that your average order contains multiple products (e.g. 2 or more) then it might be worth using the AOV revenue and fulfilment costs instead of the individual item costs.
OUTPUTS
Once your figures are entered into the Inputs box, the Outputs column will populate.
The column on the right, ROAS, will show you what ROAS figure your ads will need to be achieving in order to achieve the percentage profit margin in the left column, Profit Margin.
From our example figures above, if you're aiming to achieve a 30% profit margin, then you know that your ads should be achieving a ROAS of 1.9 or more.
To use these figures for your rules, you might therefore want to pause any ads that are bringing in an ROAS of 1.60 or less, scaling any that are bringing in 1.90 or more (and perhaps mega-scaling anything that brings in above 3!).
Remember
The ROAS calculator is a guide to help you figure out what ROAS numbers to use in your rules. To get the most from it, you'll need to have a clear understanding of your revenue, fulfilment costs and profit margins - based on your historical data.