Guide2 min readUpdated

What Is a Good ROAS? Start With Your Margin, Not an Average

What is a good ROAS? There is no universal number. A good ROAS is one above your own break-even, which depends on your margin. Here is how to work it out.

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There is no universal good ROAS. A good ROAS is one that is above your own break-even, and break-even depends on your profit margin. The same 4x can make money in one business and lose it in another. This page shows how to work out your number, and the calculator does it in seconds.

Why averages mislead

Averages mix businesses with very different margins. A business with 70% margin breaks even at a ROAS of about 1.4. One with 25% margin needs 4. Quoting a single good number to both would be wrong for one of them.

How to find your good ROAS

  • Find your margin. The share of each sale left after the cost of delivering it.
  • Compute break-even. 1 divided by the margin. At 40% it is 2.5.
  • Add a profit goal. If you want 10% of revenue as profit after ads, the target is higher than break-even.
  • Compare. Anything above your target makes money. Anything below it does not, whatever the average says.

Break-even by margin

Profit marginBreak-even ROAS
25%4.0
40%2.5
50%2.0
70%1.43

Who this guide suits

It suits advertisers and agencies who keep being asked whether a ROAS is good and want a straight, defensible answer.

What a ROAS can miss

  • Repeat purchases and lifetime value.
  • Sales that ads influenced but did not directly drive.
  • Overheads beyond the margin you entered.
  • Returns and fees, unless you subtract them.

Questions about what is a good roas

What is a good ROAS?

One above your own break-even. Break-even ROAS is 1 divided by your profit margin.

Is a 4x ROAS good?

It depends on your margin. At a 40% margin it clears break-even of 2.5. At a 25% margin it only breaks even.

Is a 2x ROAS bad?

Not if your margin is high. At a 70% margin, break-even is about 1.43, so 2x makes money.

Where can I work out my number?

In the ROAS calculator, which reads the result against your own break-even.

How do I track ROAS across clients?

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