It depends on your margin. A good ROAS is anything above your break-even ROAS, which is roughly 1 divided by your profit margin, so a thinner margin needs a higher ROAS to profit.

ROAS (return on ad spend)

Definition

ROAS, or return on ad spend, is revenue divided by ad spend: a 4x ROAS means $4 of revenue for every $1 spent on ads. Regular ROAS ignores what the product and fulfilment cost you, so a campaign can show a healthy ROAS while losing money. Profit-aware ROAS compares ad spend to profit instead, using your real margin.

Regular ROAS vs profit-aware ROAS

Regular ROAS only looks at revenue, so it treats a low-margin product and a high-margin product as if they were the same. Two campaigns at 3x ROAS can have opposite outcomes: one profitable, one a loss, depending on cost of goods sold and fulfilment.

Profit-aware ROAS fixes this by comparing ad spend to the profit an order actually makes, so you scale the campaigns that leave money behind rather than the ones that just move revenue.

Break-even ROAS

Break-even ROAS is the point where a campaign neither makes nor loses money after costs. A rough version is 1 divided by your profit margin, so a 40% margin gives a break-even ROAS of 2.5x. Below that you are paying to lose money; above it you are profitable.

Knowing your break-even ROAS turns ad decisions from guesswork into a clear target. See how to calculate net profit and profit-aware ROAS.

Example

With a 40% margin, break-even ROAS is 1 / 0.40 = 2.5x. A campaign at 2x ROAS is losing money; at 4x it is comfortably profitable.

ROAS (return on ad spend)

Regular ROAS vs profit-aware ROAS

Break-even ROAS

Common questions

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