ROAS — return on ad spend — is how much revenue each dollar of advertising brings back. It's the headline metric on Meta, Google, TikTok, and Amazon Ads. But “what's a good ROAS?” has no universal answer: it depends entirely on your profit margin.
The number that actually matters is your break-even ROAS — the point where ads stop costing you money. Anything above it is profit; anything below it is a subsidy.
Works for any channel — Meta, Google, TikTok, or Amazon Ads.
Product + fulfilment
Net margin you want to keep
ROAS = Revenue from ads ÷ Ad spend. Spend $1,000 and generate $4,000 in sales and your ROAS is 4.0× (often written 400%).
On its own, ROAS says nothing about profit — a 4× ROAS can lose money on a low-margin product and print money on a high-margin one. That's why you have to anchor it to your margin.
Break-even ROAS = 1 ÷ gross margin. If your gross margin is 60%, your break-even ROAS is 1 ÷ 0.60 = 1.67×. Above 1.67× you're profitable on ads; below it you're paying to lose money.
This is why a “good” ROAS is personal. A store with 30% margins needs a 3.3× ROAS just to break even, while a 70%-margin store breaks even at 1.43×. The calculator above turns your price and cost into your exact break-even and target ROAS.
ACoS (advertising cost of sale), common on Amazon, is simply the inverse of ROAS: ACoS = 1 ÷ ROAS. A 4× ROAS is a 25% ACoS; a 1.67× break-even ROAS is a 60% break-even ACoS.
They describe the same thing from opposite directions — ROAS is “revenue per dollar spent,” ACoS is “percent of revenue spent on ads.” Use whichever your platform reports and convert as needed.
Any ROAS above your break-even ROAS is profitable. Break-even ROAS equals 1 ÷ your gross margin, so a 60%-margin store breaks even at 1.67× and typically targets 3–4× for healthy profit. There is no single “good” number — it's set by your margin.
Break-even ROAS is the return on ad spend at which advertising exactly covers its own cost and you make zero profit on those sales. It equals 1 divided by your gross margin (as a decimal).
They're inverses of each other. ROAS = revenue ÷ ad spend, while ACoS = ad spend ÷ revenue. A 4× ROAS is the same as a 25% ACoS.
Connect your store and watch these numbers update themselves — no spreadsheets.
Profit margin is the share of each sale you keep as profit. Learn the profit margin formula, how it differs from markup, and what a healthy margin looks like — then run your own numbers.
Customer lifetime value is the total profit one customer brings over their relationship with you. Learn the LTV formula, the LTV:CAC ratio investors care about, and how to raise it.