Revenue is going up while profit isn't one of the most common things we see. A brand is growing, the numbers look good in the dashboard, but the bank account tells a different story. Usually the culprit is simple: nobody has properly worked out what it actually costs to acquire a customer and fulfil an order once you account for COGS, shipping, returns, and platform fees. Once you know that number, everything changes.
ROAS is not the whole picture. A 4x ROAS sounds great. But if your gross margin is 40% and your shipping costs are high, a 4x ROAS might mean you’re barely breaking even on every order. The metric that matters is contribution margin after marketing. This is what’s left after every cost to deliver that sale. Most agencies don’t talk about this. We build our whole strategy around it.
Without the right targets, you can’t make good decisions. Should you spend more on acquisition or focus on retention? Is that new channel worth testing? Can you afford to lower your AOV with a promotion? These questions are almost impossible to answer well without a clear view of your unit economics. Once you have that view, the decisions get a lot easier.
