Question 1

What is a good ROAS?

Accepted Answer

A 'good' ROAS depends on your margins. For most ecommerce businesses, 3x-4x ROAS is considered healthy — meaning $3-$4 in revenue for every $1 spent on ads. But the real metric is profit ROAS: after subtracting COGS, you need at least 1x to break even. Higher margin products can be profitable at lower ROAS.

Question 2

How do you calculate ROAS?

Accepted Answer

ROAS = Revenue from Ads / Ad Spend. If you spend $3,000 and generate $12,000 in revenue, your ROAS is 4.0x. For a more accurate picture, calculate Profit ROAS = (Revenue - COGS) / Ad Spend. This shows whether you're actually making money after product costs.

Question 3

What is break-even ROAS?

Accepted Answer

Break-even ROAS is the minimum ROAS needed to cover your COGS and ad spend with zero profit. Formula: Break-even ROAS = 1 / (1 - COGS%). With 40% COGS, break-even ROAS is 1.67x. With 60% COGS, it's 2.5x. Anything below this means you're losing money on every ad-driven sale.

Question 4

What is the difference between ROAS and ROI?

Accepted Answer

ROAS measures revenue generated per dollar of ad spend (Revenue / Spend). ROI measures profit: (Revenue - Costs - Spend) / Spend × 100. A 4x ROAS sounds great, but with 50% COGS, your ROI is only 100%. ROAS ignores product costs; ROI accounts for them. This calculator shows both perspectives.

Question 5

What ROAS should I target for Shopify stores?

Accepted Answer

For Shopify stores: low-margin products (60%+ COGS) need 3x-5x ROAS. Medium-margin products (30-50% COGS) need 2x-3x ROAS. High-margin products (under 30% COGS) can be profitable at 1.5x-2x ROAS. Factor in Shopify's transaction fees (2.4-2.9%) on top of COGS for a true break-even calculation.

Free ROAS Calculator

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