A good ROAS is relative to margin
A ROAS is good when the gross profit on the revenue it brings in is larger than the ad spend, which happens above 1 ÷ margin. ROAS itself is just revenue over ad spend: Google Ads calls it conversion value per cost,[2] Meta calls it purchase value divided by amount spent.[3] Neither number knows your costs, which is why industry “average ROAS” figures say little about your business. We do not publish them because none we could find is traceable to a primary, dated source.
- Break-even ROAS2.5x
- Target ROAS4x
- Revenue needed$40,000
- Profit after ads$6,000
Target ROAS table
| Margin | Break-even | 5% profit | 10% profit | 20% profit |
|---|---|---|---|---|
| 20% | 5x | 6.67x | 10x | — |
| 30% | 3.33x | 4x | 5x | 10x |
| 40% | 2.5x | 2.86x | 3.33x | 5x |
| 50% | 2x | 2.22x | 2.5x | 3.33x |
| 70% | 1.43x | 1.54x | 1.67x | 2x |
Read across a row to see how fast the bar rises: at a 30% margin, break-even is 3.33x but keeping 20% takes 10x, which few campaigns reach. That is the signal to raise prices, cut unit costs or count repeat purchases rather than to squeeze the ads.
Setting a target ROAS in Google Ads
Google defines target ROAS as the average conversion value you would like for each dollar spent on ads, entered as a percentage: $5 in sales for $1 of spend is 500%.[1] Enter the figure from this page’s table rather than last month’s actual ROAS. Set it too high and the campaign spends less and wins fewer auctions; set it at break-even and it buys revenue that earns nothing.
Margin here means contribution margin, the share of price left after variable costs.[4] Work it out from price, product cost, shipping and fees with the break-even ROAS calculator.
When a lower ROAS is still good
A ROAS below break-even on the first order can still be good if customers buy again. If the average customer orders three times, the ads only need to pay for the first order out of three orders’ gross profit. Measure it with the customer lifetime value calculator, and compare acquisition cost with the CAC calculator. Textbook treatments make the same point: ROAS is a campaign efficiency ratio, not a full measure of marketing return.[5] For a profit-based view, use the marketing ROI calculator.
Mistakes when judging ROAS
- Using someone else’s benchmark. A “4x is good” rule assumes a margin around 25–30%. Calculate yours.
- Comparing channels on different attribution. Search ROAS measured on last click and social ROAS measured on a view window are not comparable.
- Ignoring the budget size. ROAS usually falls as spend rises. The right question is whether the next $1,000 still clears break-even.
Not affiliated with Google or Meta. Platform names are trademarks of their owners and appear only to identify whose documentation we cite.
Frequently asked questions
What is a good ROAS?
Anything above 1 ÷ your gross margin. At 40% margin that is 2.5x; at 25%, 4x; at 60%, 1.67x.
Is a 2x ROAS good?
Only if your margin is above 50%. At a 50% margin, 2x is break-even; below that it loses money.
What is a good ROAS for Google Ads?
The same rule: above 1 ÷ margin, with a target set by the profit you want. Google Ads takes it as a percentage, so 3x is entered as 300%.
What is the average ROAS?
Published averages vary by source and rarely state their method or margin. Your break-even ROAS is a more useful benchmark than any average.
Sources
- About Target ROAS bidding
- Understand your conversion tracking data (Conv. value / cost, Cost / conv.)
- Purchase ROAS (return on ad spend)
- Principles of Accounting, Volume 2, 3.1 Contribution margin per unit and contribution margin ratio
- Principles of Marketing, 14.3 The Use of Metrics to Measure Advertising Campaign Effectiveness (ROAS, conversion rate)