Advertising
TikTok Shop Ad Cost Guide
TikTok Shop ad cost should be evaluated as cost per profitable order, not only as CPM, CPC or campaign ROAS. A seller can have a campaign that generates orders but still loses money when coupons, shipping and platform fees are counted.
Break-even approach
Calculate profit before ads first. This is the maximum ad spend you can pay per order before reaching zero contribution profit. Then divide order revenue by that break-even ad spend to estimate the break-even ROAS.
When to scale
Do not scale simply because one video gets cheap clicks. Scale only when the product keeps a positive contribution margin after average ad spend, expected refund rate and fulfillment cost. If margin is thin, test bundles or higher average order value before increasing budget.
Useful operating rule
Keep one conservative scenario, one expected scenario and one aggressive scenario. If the product only works in the aggressive scenario, it is risky for paid traffic.