CPA vs ROAS

Same dollar, two directions. CPA counts cost per conversion; ROAS counts revenue per dollar of spend. Average order value connects them: ROAS = AOV ÷ CPA. An $80 AOV at a $20 CPA is a 4.0 ROAS, by definition.

Break-even ROAS = 1 ÷ gross margin. At 60% margin, 1 ÷ 0.60 = 1.67: every ad dollar must return $1.67 of revenue before the sale contributes anything. At 30% margin the bar is 3.33. This is why a 3.0 ROAS is a win for a software line and a loss for a thin-margin retailer. The same margins drive break-even CPA; the two ceilings are one fact wearing two units.

Equivalent target CPA = AOV ÷ target ROAS. A 4.0 target ROAS on a $120 AOV is a $30 target CPA. Working the other way: a $45 target CPA on a $90 AOV implies a 2.0 ROAS target. Keep one source of truth and derive the other, or the two bid strategies will quietly disagree.

• Bid to target CPA when conversions are near-uniform in value: leads, installs, signups. See Target CPA bidding.
• Bid to target ROAS when order values vary widely: the algorithm can chase a $300 basket harder than a $30 one only if you bid on value.
• Amazon runs the same logic under a different name: ACoS is 1 ÷ ROAS. Mapping on Amazon ACoS vs CPA.