What is a good ROAS? One that leaves you something.

What ROAS tells you.

Return on ad spend compares the value attributed to advertising with the amount spent on that advertising. When the value is revenue, $10,000 attributed to $2,000 of spend is 5× ROAS: five dollars of attributed revenue for every advertising dollar.

That ratio does not subtract the cost of products, shipping, returns, payment fees, management or overhead. It also depends on what value you record and which purchases the platform attributes to the campaign. A revenue-based ROAS and a profit-value ROAS are different measures.

A good revenue-based ROAS is therefore specific to your costs, customer mix and the contribution you need to retain. A universal “aim for 4×” answer skips the very thing you are trying to decide.

The same ROAS can produce different outcomes.

Both stores report the same return on advertising. Store A retains $1,000 after the entered costs. Store B is $500 short. These are illustrative calculations, not client results. Additional omitted costs can reduce Store A’s remaining contribution.

Ask which business you are running before borrowing someone else’s target. Use our ROAS calculator to see what your own sale leaves.

Calculate break-even ROAS.

Start with the share of net revenue available before advertising. With $10,000 of revenue and $7,000 of included non-ad costs, $3,000 is available. That is 30% of revenue.

Using the margin as a decimal, 1 ÷ 0.30 gives 3.33×. Under the same cost assumptions, that is the revenue-to-spend ratio that uses the available contribution on advertising. It leaves nothing after the costs included in the model.

Include the costs that actually matter to the decision. Gross margin after product cost alone may overstate what you can spend if you still need to cover payment fees, fulfilment and shipping. If there is no positive contribution before ads, no positive advertising budget can make those entered economics break even.

Set a target that leaves a contribution.

Breaking even on the included costs is a boundary. Decide what you want the order to retain. If the pre-ad margin is 30% and you want to keep 10% of net revenue after the entered costs and advertising, 20% remains available for ad spend.

Here, 1 ÷ 0.20 gives 5×. The same example leaves a $20 ad-spend allowance on a $100 order. The calculator shows both the ROAS target and the equivalent cost-per-order allowance.

These targets assume the entered order mix and per-order cost allocations hold. A fixed monthly fee spread over more orders changes the allocation. A discount, different product mix or higher return rate can also change the target. Recalculate when the economics change.

Check what went into the ratio.

• The revenue basis. Is the value before or after discounts, refunds, shipping and tax? Use the same basis as the costs you are comparing it with.
• The attribution window. Which purchases does the platform claim, and how long after the interaction? Compare like periods and avoid adding duplicate channel claims.
• The customer mix. Are the orders from new customers or people who already buy from you? A strong return from repeat buyers does not establish affordable acquisition.
• The timing. Some costs and refunds arrive later than the initial sale. Leave enough time to assess the settled order economics.

Read customer acquisition cost alongside ROAS. It answers a different question: what did it cost to bring a new customer into the business?

A good average is not a reason to scale blindly.

A 5× average does not tell you what the next advertising dollar will return. Review the additional response from an increase, rather than assuming the historical ratio carries forward. Reporting uncertainty means this comparison needs judgment; it is not a clean controlled experiment by default.

Repeat purchases can justify a different first-order target, but use actual cohort contribution and payback. Future revenue is not all available to repay acquisition costs. The business still has to fulfil those future orders and fund the wait.

Run Ads manages Meta and Facebook advertising for ecommerce around these decisions. We make the buying argument, run the campaigns and judge what deserves more spend against your business economics. Bring us the account and the costs. We will discuss what the advertising needs to achieve.