| Your question | The short answer | Where it comes from |
|---|---|---|
| What is a good ROAS? | Any ROAS above your break-even ROAS, with room for profit | The arithmetic, shown below |
| What's my break-even ROAS? | 1 ÷ your gross margin: a 40% margin needs 2.5 | The arithmetic |
| Is 4:1 good? | It's exactly break-even at a 25% margin | The arithmetic |
| How do I enter a target in Google Ads? | As a percentage: $5 of sales per $1 of ads is 500% | Google Ads Help |
| What if I sell through enquiries? | Judge cost per lead and cost per customer instead | Our travel clients' accounts |
What is a good ROAS?
A good ROAS is one that leaves you a profit after the cost of what you sold and the ads themselves. The line between profit and loss is your break-even ROAS, and you can work it out from one number you already know: your gross margin. Anything above break-even makes money; how far above it you need to be depends on the profit you want and the fees you pay.
What is ROAS, and how do you calculate it?
ROAS (return on ad spend) is the revenue your ads bring in divided by what the ads cost. If $2,000 of ads brought in $8,000 of sales, the ROAS is 8,000 ÷ 2,000 = 4. You will see it written as 4, 4x, 4:1 or 400%; all mean $4 of revenue for every $1 of ads. Use revenue and spend from the same campaigns and the same period.
ROAS = revenue from ads ÷ ad spend
Break-even ROAS = 1 ÷ gross margin
Target ROAS = 1 ÷ (gross margin − share of revenue you want to keep as profit)What ROAS do you need to break even?
Divide 1 by your gross margin: the share of each sale left after the cost of the product or service. Include delivery, payment fees and returns in that cost if you pay them.
| Gross margin | Break-even ROAS | As a percentage | What it means |
|---|---|---|---|
| 20% | 5.0 | 500% | $5 of sales for every $1 of ads just to cover costs |
| 25% | 4.0 | 400% | $4 for every $1 |
| 30% | 3.3 | 333% | $3.33 for every $1 |
| 40% | 2.5 | 250% | $2.50 for every $1 |
| 50% | 2.0 | 200% | $2 for every $1 |
| 60% | 1.7 | 167% | $1.67 for every $1 |
| 70% | 1.4 | 143% | $1.43 for every $1 |
Where does the “4:1 rule” come from?
Many guides repeat a rule of thumb: aim for a ROAS of 3:1 or 4:1. Few show where the number comes from. Here is where: 4:1 is exactly break-even at a 25% margin. At a 40% margin a ROAS of 4 makes a healthy profit; at a 20% margin the same ROAS still loses money. So “aim for 4” can quietly mean “aim to make nothing”.
How do you set a target ROAS?
Decide what share of revenue you want to keep as profit, take it off your margin, and divide 1 by what is left. With a 40% margin and a 10% profit goal, the target is 1 ÷ (0.40 − 0.10) = 3.3.
| Gross margin | Target ROAS | Enter in Google Ads as |
|---|---|---|
| 30% | 5.0 | 500% |
| 40% | 3.3 | 333% |
| 50% | 2.5 | 250% |
| 60% | 2.0 | 200% |
Google Ads takes a Target ROAS as a percentage. Google's own example is a shop that wants $5 of sales for every $1 of ads, which it enters as 500%. The strategy needs a value on each conversion, and Search and Shopping campaigns need at least 15 conversions in the past 30 days. Our ROAS Calculator shows your break-even and target ROAS together.
Your break-even ROAS worksheet
Fill in the last column with your own numbers, from top to bottom.
| Step | How to work it out | Your number |
|---|---|---|
| 1. Gross margin | Share of each sale left after the product, delivery, payment fees and returns | Not supplied |
| 2. Break-even ROAS | 1 ÷ your margin (as a decimal) | Not supplied |
| 3. Profit you want to keep | As a share of revenue, before fees | Not supplied |
| 4. Target ROAS | 1 ÷ (margin − profit share) | Not supplied |
| 5. Enter in Google Ads as | Target ROAS × 100% | Not supplied |
| 6. Your current ROAS | Revenue from ads ÷ ad spend, same period | Not supplied |
| 7. Verdict | Above step 4: on target. Between steps 2 and 4: profitable, below goal. Below step 2: losing money | Not supplied |
Why are average ROAS figures misleading?
- Margins differ. A ROAS that makes one business money loses it for another.
- Platforms count differently. Each one credits the sales it can link to an ad, under its own rules and time windows.
- Brand searches flatter the figure. People who searched for you by name were likely to buy anyway.
- New and repeat customers are mixed. A first order can be worth far more than its value if customers come back.
- Lead businesses have no sale at the click. Their real return shows up weeks later, outside the ad platform.
What is a good ROAS for ecommerce?
The same rule, with every cost in the margin: the product, delivery, payment fees and returns. Take a fictional store with a 35% margin after all of those. Its break-even ROAS is 1 ÷ 0.35 = 2.9, and to keep 10% of revenue as profit it needs 1 ÷ (0.35 − 0.10) = 4.0. A ROAS of 3 there barely covers its costs, even though it looks healthy.
What is a good ROAS for Google Ads and Meta?
The same as anywhere: above your break-even ROAS, with room for your profit goal. In Google Ads, conversion value divided by cost is your ROAS, and a Target ROAS is entered as a percentage, so a target of 3.3 becomes about 333%. In Meta Ads Manager, the Purchases ROAS column divides the purchase value Meta links to your ads by the amount spent, and Meta notes the figure may be estimated. Check both against the sales in your own shop or accounts.
Google Ads management and Meta Ads management are how we set and manage those targets for clients.
What if your sales happen offline?
Then ROAS is the wrong number. Our two UK travel clients sell Umrah packages and visa services: people enquire through a Meta instant form and book later, in the agency's own systems. There is no purchase value at the click, so a platform ROAS would be blank or misleading.
So we judge those campaigns on cost per lead, and on what a lead is worth to the client. Travel To Kabba's main campaign brings leads at £3.17 on £17 a day; Easy Travels' two visa campaigns at £3.21 on £15 a day and £3.29 on £12 a day. The full records are in the Travel To Kabba case study and the Easy Travels case study.
Most a lead can cost = customer value × close rate × gross margin
Illustration only: a $1,000 customer × 1 in 10 leads buying × 40% margin = $40 a leadIf your cost per lead sits well under that figure, the ads pay, whatever a ROAS column says. The Cost Per Lead Calculator works it out with your own numbers, and our Facebook ads cost guide shows how those travel campaigns were run.
| If you… | Judge your ads on | Why |
|---|---|---|
| Sell online, at checkout | ROAS against your break-even | Revenue is known at the click |
| Take enquiries and sell later | Cost per lead and cost per customer | Revenue arrives offline, weeks later |
| Do both | Each campaign by its own goal | Mixing them hides what works |
What is blended ROAS, and why does it differ from platform ROAS?
Blended ROAS is your total revenue divided by your total ad spend across every channel, taken from your own accounts. Platform ROAS is what each ad platform credits to itself. Because each platform counts the sales it can link to its own ads, two platforms can claim the same sale, and their totals can add up to more than you actually sold. Blended ROAS is the one to hold your break-even against.
- Attribution: each platform counts conversions under its own rules and time windows.
- Fees: management fees and tools aren't in the platform's figure.
- Refunds and cancellations: a counted sale may never become revenue.
- Duplicates: the same sale can be counted twice if tracking fires twice.
ROAS vs ROI: which matters more?
ROI, because it counts what you keep. Take the same $8,000 of sales from $2,000 of ads, a ROAS of 4. At a 40% margin the sales leave $3,200 of gross profit, so the ads make $1,200: an ROI of 60%. At a 20% margin they leave $1,600, and the same ROAS of 4 loses $400.
ROAS myths, and the facts
| Myth | Fact |
|---|---|
| 4:1 is a good ROAS. | 4:1 is break-even at a 25% margin. Whether it's good depends on yours. |
| A higher ROAS is always better. | Past a point, a very high ROAS means you're spending too little and missing sales that would still be profitable. Profit is the goal, not the ratio. |
| ROAS and ROI are the same. | ROAS uses revenue. ROI counts your margin and every cost, including fees. |
| The ROAS in my ad account is what I really made. | Platforms credit the sales they can link to an ad under their own rules, and leave out fees and refunds. |
| Every business should track ROAS. | If you sell through enquiries, cost per lead and cost per customer tell you more. |
Questions people ask about ROAS
What does ROAS stand for?
Return on ad spend: the revenue your ads bring in divided by what they cost. A ROAS of 4 means $4 of revenue for every $1 spent on ads.
What is the difference between ROAS and ROI?
ROAS uses revenue; ROI counts what you keep after the cost of what you sold and every cost of the ads, fees included. The same ROAS of 4 is a 60% ROI at a 40% margin, and a loss at a 20% margin.
Is a ROAS of 2 good?
Only if your gross margin is above 50%. At exactly 50% a ROAS of 2 breaks even before fees; below that it loses money.
Is a ROAS of 4 good?
Yes, if your gross margin is above 25%: your break-even ROAS is then below 4. At a 20% margin you need 5 just to break even, so 4 still loses money.
What does a ROAS of 300% mean?
$3 of revenue for every $1 spent on ads, the same as a ROAS of 3. It says nothing about profit until you compare it with your margin.
Is ROAS a percentage?
It can be written either way: a ROAS of 4 is the same as 400%. Google Ads uses the percentage when you set a Target ROAS.
What is a good ROAS for Google Ads?
Above your break-even ROAS, with room for your profit goal, as on any platform. Enter it as a percentage, so a target of 3.3 becomes about 333%.
Is a higher ROAS always better?
No. Chasing an ever-higher ratio usually means cutting spend that was still bringing profitable sales. Aim for the most profit, which often means a ROAS comfortably above target rather than as high as possible.
| Question | Short answer |
|---|---|
| What does ROAS stand for? | Return on ad spend |
| ROAS or ROI? | ROI counts your margin and fees |
| Is a ROAS of 2 good? | Only above a 50% margin |
| Is a ROAS of 4 good? | Yes, above a 25% margin |
| What is a ROAS of 300%? | $3 of revenue per $1 of ads |
| Is ROAS a percentage? | It can be; Google Ads uses % |
| Good ROAS for Google Ads? | Above break-even; enter it as % |
| Is higher always better? | No: profit is the goal |
Work out your own break-even and target ROAS with the free ROAS Calculator. If you take enquiries rather than sales, start with our Facebook ads cost guide.
About this article
The formulas are standard arithmetic. The Google Ads and Meta definitions are quoted from their help pages as they read on 18 October 2026. The store, the $8,000 example and the lead illustration are fictional. The travel figures are cost-per-lead results from our clients' Meta Ads Manager, as published in our case studies; we have no client ROAS results to show, so this article shows none.