Formula
ROAS = revenue from ads ÷ ad spend. Break-even ROAS = 1 ÷ gross margin.
Example
$1,000 in ads that brought $4,000 in sales is a 4× ROAS (400%). With a 40% margin, break-even is 2.5×, and $600 is left as profit after ads.
ROAS or ROI?
ROAS uses revenue; ROI uses profit. A 4× ROAS looks great, but with a 20% margin (break-even 5×) the campaign loses money.
Frequently asked questions
What is a good ROAS?
Anything above your break-even ROAS. A store with a 50% margin breaks even at 2×; with a 25% margin it needs 4×.
What goes into gross margin?
Price minus product cost, shipping, platform fees and sales tax you pay, as a percentage of the price.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.