What Is a Good ROAS? How to Find Your Break-Even Number

What is a good ROAS, and why revenue is not profit

ROAS, or return on ad spend, shows how much revenue each sum spent on advertising brings back. Divide revenue from ads by ad spend. A ROAS of three means every sum spent returned three sums of revenue.

The catch is that revenue is not profit. Out of it you still pay for the product, delivery, payment fees and your team. That is why an electronics store with thin markups and a beauty studio with high margins cannot aim at the same number. The first needs a high ROAS just to avoid losing money, while the second can be profitable at a modest one.

Break-even ROAS: the lower limit

Advertising stops losing money when the gross profit on ad-driven revenue covers the ad spend. So break-even ROAS equals one divided by your gross margin share.

Suppose half of every sale's revenue remains as gross profit. Break-even ROAS is then two: ads can consume at most half of the revenue. If only a quarter remains, the threshold rises to four. The lower the margin, the higher the bar.

• Calculate margin by product or service category, not for the whole business.
• Use gross profit after cost of goods, not a rough markup.
• Anything below break-even means the campaign is losing money.

Target ROAS: what to add on top

Break-even is zero, not a goal. Your target ROAS must be higher, because advertising brings other costs with it. Express each item as a share of revenue and add it to the calculation.

• Fees when customers pay through Click or Payme.
• Delivery, from couriers in Tashkent to shipping to the regions.
• Returns and cancelled orders.
• The media buyer's work and content production.
• Order handling: operators, managers, packaging.
• The profit you want to earn from ads.

How repeat purchases change the target

If customers come back, the first order may only break even or even lose money, with profit arriving on the second and third purchase. In that case the acceptable ROAS for a first order is lower. But rely on this only if you know what share of customers really buy again and how much they spend. Without that data, the safer rule is to require payback on the first order.

Why ROAS differs between campaigns

Retargeting talks to people who already know you, so its ROAS is usually high. Campaigns for cold audiences show less but fill the funnel. Branded search also looks great, although some of those buyers would have purchased without an ad.

So do not switch off everything below average. Retargeting often lives off prospecting: stop the flow of new people and its results fade within weeks. Judge cold campaigns on repeat purchases over several months, not only on the first order.

Can you trust the ROAS in your ad account

Meta and Google accounts calculate ROAS with their own attribution, counting purchases after clicks and sometimes after views. Two channels can claim the same sale, while orders that came through Telegram or a phone call may not appear at all. Always compare the revenue in the account with real sales in your CRM or accounting system.

If automated tracking is not set up yet, start with a spreadsheet. Once a week, note ad spend and the value of orders that came from ads, marking the source with a promo code or a question like where did you hear about us. It is rough, but it shows where you stand against your break-even line.

A simple order of work for your business

Put together, the process is short. Scale campaigns that stay above target consistently; for the rest, look for the cause in creative, audience, website or product range. With target-return bidding in Google Ads and Meta, start from a value close to your current result and raise it gradually, otherwise delivery drops sharply.

If you want report figures to match the money in your till, markdev sets up end-to-end analytics from the click to the payment in your CRM. Tell us about your task and we will work out your break-even and target ROAS together.

• Find your average margin by category.
• Calculate break-even ROAS.
• Add other costs and desired profit to get target ROAS.
• Compare with actual campaign ROAS, checking revenue against real sales.
• Decide on scaling from steady results, not one lucky day.