What is a good ROAS?
You'll see '4:1 is good' repeated all over the internet. It's a decent rule of thumb and a terrible way to run a business. Your real target depends on one number most people skip: your margin.
Skip the math — the free roas calculator runs this from your own figures.
Open the free calculator →What ROAS actually measures
ROAS — return on ad spend — is revenue divided by ad spend. Spend $1,000 on ads, generate $4,000 in sales, and your ROAS is 4, often written 4:1.
Notice what it does not include: the cost of the product you sold. ROAS is a revenue ratio, not a profit ratio. That single gap is why a 'good' ROAS for one business is a money-loser for another.
Why 4:1 is a myth in disguise
The famous 4:1 benchmark quietly assumes a roughly 20–25% margin business. If you keep 25 cents of gross profit on every sales dollar, a 4:1 ROAS means $4 of sales cost you $3 to fulfil plus $1 of ads — you break even, not profit.
Change the margin and the whole benchmark moves. A software product with 90% margins can be wildly profitable at 2:1. A low-margin reseller can lose money at 6:1. The number in the blog post was never about your business.
Find your break-even ROAS first
Before you set a target, find the line where ads stop losing money. Break-even ROAS is simply 1 ÷ your gross margin. At a 25% margin, that's 1 ÷ 0.25 = 4:1. At a 50% margin, it's 2:1. At an 80% margin, it's 1.25:1.
Any ROAS above that line is contributing profit; anything below it is buying revenue at a loss. This one calculation tells you more than any industry benchmark ever will.
Then set a target above it
Break-even keeps you flat. To actually grow, you want a target ROAS comfortably above break-even so each campaign funds your fixed costs and leaves profit on top.
A common approach: aim for a ROAS that gives you a healthy margin after ad cost — often 1.5× to 2× your break-even figure — then hold campaigns to it and cut the ones that can't clear the bar.
When a lower ROAS is still smart
ROAS measures the first sale only. If your customers come back and buy again, a break-even (or even slightly loss-making) first purchase can be a bargain, because the real return shows up over the customer's lifetime, not on day one.
The honest version: only spend below break-even ROAS on purpose, with a real repeat-purchase rate to back it up — not as a hope. The free calculator below works out your break-even and target ROAS from your own margin so you're deciding with numbers, not vibes.
Questions
Is ROAS the same as ROI?
No. ROAS compares revenue to ad spend and ignores the cost of what you sold. ROI (or a true profit calculation) subtracts your product costs and other expenses, so it tells you whether you actually made money. A campaign can have a healthy-looking ROAS and still lose money once margin is included.
What's a good ROAS for e-commerce specifically?
It still depends on margin, but many physical-product stores run on 20–40% gross margins, which puts break-even somewhere between 2.5:1 and 5:1. That's why the generic '4:1' floats around e-commerce — it roughly matches a mid-margin store. Calculate your own margin to get a number you can trust.