Guide · 4 min read
What is ROAS — and what counts as a good one?
ROAS (return on ad spend) answers the only question that really matters about an ad: for every $1 you put in, how much comes back?
The formula
Spend $100 on ads, make $350 in sales from them → your ROAS is
350 ÷ 100 = 3.5, usually written 3.5×.
Every dollar became three and a half.
The number everyone quotes — and why it's not yours
You'll often hear "aim for a 4× ROAS." That's a reasonable landmark for a typical online shop, but the honest answer is: your good ROAS depends on your profit margin, and you can work it out with one division:
- You sell a $50 item that costs you $25 to make and ship → margin is 50% →
break-even ROAS is
1 ÷ 0.5 = 2×. Anything above 2× is profit. - You sell a $50 item that costs you $40 → margin is 20% → break-even is
1 ÷ 0.2 = 5×. A "great looking" 4× ROAS is actually losing money.
Reading your ROAS
| Your ROAS | What it means | What to do |
|---|---|---|
| Below 1× | Every dollar shrinks | Pause. Fix targeting, creative or landing page before spending more. |
| 1× – break-even | Revenue, but no profit | Improve the ad or raise average order value. |
| Just above break-even | Working, barely | Test variations; small gains compound. |
| Well above break-even | A winner | Scale the budget gradually (watch that ROAS holds). |
ROAS vs ROI — not the same thing
ROAS only compares revenue to ad spend. ROI compares profit to all costs (product, shipping, tools, your time). ROAS is the quick daily health check; ROI is the end-of-month truth. A campaign can have a positive ROAS and still a negative ROI if your margins are thin — which is exactly why the break-even formula above matters.
Get your ROAS without a spreadsheet
Enter spend, revenue and clicks into our free calculator — it returns ROAS, CTR, CPC, CPA and a plain-English read on whether to scale or fix.
Open the ad metrics calculator