I thought my break-even ROAS was 1.0 — it was 1.7
My whole 'profitable' dropship store was quietly losing money because I scaled on the wrong break-even number.
— The setup: $40 product, dropship, I scaled everything that beat 1.2x ROAS thinking 1.0x was break-even.
— The move: I finally built the real unit economics: $40 revenue minus $14 product cost, $6 shipping, $2.40 payment fees, $3 refund/chargeback reserve = $14.60 actual margin.
— The numbers: true break-even ROAS was $40 / $14.60 = 2.74x on COGS, or about 1.7x once you account for the full margin against revenue, depending how you frame it. Either way, every campaign I ran between 1.2x and 1.7x ROAS was losing money while my dashboard showed green. Across a month I'd 'profitably' scaled three campaigns averaging 1.5x — a real loss of roughly $1,900 hiding under a fake-positive ROAS.
— The lesson: break-even isn't revenue / spend. It's revenue / spend adjusted for COGS, fees, shipping, and refunds. Scaling on the wrong break-even multiplies the loss.
What I'd do differently: Calculate true margin before the first ad, and tattoo the real break-even ROAS on the dashboard. Figures illustrative; the fake-green-ROAS trap is the most common way I see e-com arbitrageurs lose money confidently.
Arb Files
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