The operator's math, on one page

1Contribution, not gross margin

contribution before ads = price − landed cost − payment fee − label − packing − refunds

Gross margin stops at the shelf. Contribution is what one order adds to the business; take off ad spend per order (a month's ad spend ÷ its orders) for what it adds after ads.

2Your break-even

break-even ROAS = price ÷ contribution before ads

break-even ACOS = contribution before ads ÷ price

A target under the break-even buys every first order at a loss. ACOS is ROAS upside down.

3The last dollar, not the average

A platform's ROAS is an average. The next dollar returns less than the average on a campaign that is already spending. Judge the last dollar against the break-even; past where it falls under, each dollar loses on a first order.

4And the customers who come back

break-even with repeat customers = first-order break-even ÷ lifetime multiplier

Only on your own repeat orders, on margin, discounted, and checked against a quarter it did not see. On Amazon no export says who came back: use the first-order break-even.

5LTV to CAC, counted honestly

CAC = ad spend in a month ÷ customers whose first order fell in it

LTV (52 weeks, margin) = margin rate × (first order + repeat orders × repeat value)

Margin, not revenue. A year, not a lifetime. A new customer, not the survivors. Say CAC is blended.

6Payback

margin back by week t = margin rate × (first order + repeat orders by week t × repeat value)

Payback is the week it passes CAC. Until then, every new customer is cash out. A store can grow and still run out of cash when payback is longer than its cash lasts.

7The numbers that mislead

1. LTV to CAC on revenue: flatters.
2. Break-even ROAS on the first order alone: too strict where customers come back.
3. Gross margin: flatters.
4. Average ROAS: flatters the last dollar.

Ranked on the course's invented store; on yours the order may differ.

8In order

1. Contribution before ads on your best seller.
2. Break-even ROAS from it, and the last dollar on your largest campaign.
3. Repeat orders and payback from your own Orders export.