What is a good ROAS for your ecommerce business?

What ROAS measures and what it leaves out

ROAS, return on ad spend, is revenue divided by the ad spend that produced it. Spend $1,000, record $3,000 of revenue, and your ROAS is 3.0, sometimes written 3× or 300%.

It is a revenue ratio. It tells you how many dollars of sales came back for each dollar of advertising. It does not tell you whether those sales made money.

• Product and delivery costs.

  Cost of goods, packaging, shipping, payment fees and returns all come out of that revenue before anything is left to pay for the ad.

• Overheads and your pay.

  Rent, software, staff and the founder's salary are not in the ratio at all.

• Tax basis.

  Revenue can reach your ad platform including or excluding GST, depending on how tracking is set up. A 10% difference in the revenue moves the ratio by 10%.

• Who gets the credit.

  Each ad platform counts the sales it believes it influenced, under its own rules. Some of those sales would have happened anyway, and some are claimed by more than one platform.

• What happens next.

  A first order that loses money can still be worth it if that customer reliably comes back. First-order ROAS cannot see that, and it cannot prove it either.

None of this makes ROAS useless. It is a quick way to compare campaigns inside one platform. It becomes dangerous when it is read as a profit figure.

Calculate the return your cost base requires

The first number to know is your break-even ROAS: the return at which an ad-driven order pays for its own variable costs and the ad, with nothing left over.

Break-even ROAS = order revenue ÷ contribution before media. Contribution before media is order revenue minus every variable cost except advertising.

Consistency matters more than precision. If revenue excludes GST, costs must exclude it too. If returns are a real cost in your category, include an allowance for them. Here are two hypothetical stores with the same average order.

Now give both stores the same campaign result: $1,200 of spend returning a ROAS of 3.0. That is $3,600 of revenue, or 45 orders.

Break-even is a floor, not a target. It pays for the order and the ad and nothing else. To cover overheads and leave a profit, decide how much each ad-driven order must leave behind, then work out what that allows you to spend on the ad.

Margin changes move this number more than most founders expect. At Apothecary by Justin, lifting margin from 80.1% to 83.7% pulled break-even from 1.25× to 1.20×, measured across the whole store. Small-looking, but every order carried more gross profit with no extra acquisition cost. Our break-even ROAS calculator does this arithmetic from your own figures.

One thing the required return leaves out is repeat purchase. Some stores accept a first order below break-even because customers reliably come back. That can be sound, but only if your own customer data shows it and you have the cash to wait for it. An assumed lifetime value does not pay this month's ad bill.

Compare platform and store-level numbers

Your ROAS depends on who is counting. Meta, Google and your email platform each report the revenue they believe they influenced, using their own attribution settings. Those settings can include people who clicked days earlier and, depending on the setting, people who only saw an ad. Add the claims together and they often exceed what the store took.

The platforms claim $16,600 from a store that took $13,000 in total, and some of that $13,000 came from customers the ads never reached. The platform numbers are not lies. They answer a narrower question: which sales did this platform touch, under its rules.

The store-level ratio, total revenue over total media spend, is often called MER or blended ROAS. It cannot tell you which channel did the work, but it cannot double count either. MER vs ROAS works through both on one dataset.

• Compare your break-even with the store-level number first. If total revenue over total media sits below break-even across a full month, acquisition is losing money, whatever the platforms report.
• Use platform ROAS to compare campaigns and creative within one platform, where the counting rules are the same.
• Check whether the revenue each platform receives includes GST, and use the same basis for your break-even.
• Watch how store revenue responds when spend changes. That tells you more about the next dollar than any platform headline. When to increase your ad budget covers this in detail.

Set a target without inventing achievable performance

There are two different numbers here, and mixing them up is where most ROAS targets go wrong.

• The required return is arithmetic.

  It comes from your prices and costs, and you can calculate it today.

• The achievable return is evidence.

  It comes from what your offer, creative and audience actually produce, and you only find it by testing and measuring at store level.

A target is useful when the required return sits inside the range your evidence says is achievable. When it does not, the target is a wish. If your break-even is 4.0 and your store has never produced more than 2.5 across a month, pushing the ads harder is unlikely to close the gap. The cost base or the offer has to change.

That was Apothecary by Justin's position in January 2026: $3,204 of ad spend, $548 of revenue, and about $400 to buy a customer who left about $55 of gross profit. Three agencies had tried to optimise across that gap. Raising the average order from $69 to $137 changed what a customer was worth, and by August 2026 the store made $27,469 on $10,525 of media, a 2.61× return against a 1.20× break-even. It took about seven months and about $20,000 all up. Your ROAS target is a requirement, not a price tells that story from the target-setting side.

A target you can't hit isn't ambition.

1. 1

   Put revenue and costs on one basis.

   Choose excluding GST or including it, and use it everywhere.

2. 2

   Calculate break-even.

   Revenue divided by contribution before media, per order or across the store.

3. 3

   Add what each order must leave behind.

   Overheads and profit, stated per order, turn break-even into a required return.

4. 4

   Measure what you achieve at store level.

   Total revenue over total media for full months, read alongside the platform numbers.

5. 5

   Compare the two.

   A small gap is often a campaign problem. A large one is usually an offer, price or cost problem.

6. 6

   Test before you commit.

   Set a capped budget and a review date, and decide in advance what result would change your plan. How to set an ecommerce marketing budget helps you size it.