FB Ads (Cloth Diapers) Profit Decoder

Stop optimizing for ROAS (Return on Ad Spend). It's a vanity metric. A 4.0 ROAS on a low-margin product can be less profitable than a 2.0 ROAS on a high-margin product. You must shift your focus to POAS (Profit on Ad Spend). This tool forces you to input your margins so you can see the true net profit generated by each campaign, ad set, and ad, empowering you to make decisions based on money in the bank, not just revenue.

Before you launch any campaign, you must know your breakeven ROAS. This is calculated as 1 / (Your Gross Margin Percentage). For example, if your product has a 50% margin, your breakeven ROAS is 1 / 0.50 = 2.0. Any campaign with a ROAS below 2.0 is losing you money, regardless of how many sales it's generating. Use this as your absolute floor for performance capability.

Facebook's reported revenue does not account for payment processing fees from Shopify, Stripe, or PayPal. These typically range from 2% to 3% of total revenue. When calculating your true net profit, you must deduct these fees. On $100,000 in revenue, that's $2,000-$3,000 in costs that ad managers often overlook. This tool allows you to factor these in for a precise profit calculation.