What is a good ROAS?
There is no universal number — it depends entirely on margin. A 2x ROAS is highly profitable for software at 90% margin and loss-making for a reseller at 15% margin. Compare against your break-even ROAS, not an industry average.
Turn ad spend, CTR, conversion rate and AOV into ROAS, break-even ROAS, profit-on-ad-spend and real net profit — because a 3x ROAS can still lose money.
Clicks = Impressions × CTR. Conversions = Clicks × CVR. Revenue = Conversions × AOV. ROAS = Revenue ÷ Spend. POAS = Gross profit ÷ Spend. Break-even ROAS = 1 ÷ (1 − COGS%).
$5,000 spend on 500,000 impressions at 1.8% CTR = 9,000 clicks ($0.56 CPC). At 2.5% CVR that's 225 orders ($22.22 CPA) and $18,000 revenue at an $80 AOV — a 3.6x ROAS. With 30% COGS, gross profit is $12,600, so POAS is 2.52x and net profit is $7,600.
There is no universal number — it depends entirely on margin. A 2x ROAS is highly profitable for software at 90% margin and loss-making for a reseller at 15% margin. Compare against your break-even ROAS, not an industry average.
ROAS uses revenue, so it ignores product cost. POAS (profit on ad spend) uses gross profit and is the metric that actually tells you whether scaling spend makes you richer.
Meta and TikTok use view-through and 7-day click attribution and count each platform's own claim, so overlapping campaigns double-count. Shopify counts one order once. Expect platform ROAS to be 20–40% optimistic.
Fold them into COGS. A 12% return rate and $6 average shipping on an $80 AOV effectively adds ~19 percentage points to COGS, which raises break-even ROAS from 1.43x to about 1.96x.
CPA when AOV is uniform; ROAS when order values vary widely. High-AOV catalogues almost always perform better under value-based bidding than cost-per-action bidding.
Marketing Efficiency Ratio = total store revenue ÷ total ad spend across all channels. It's attribution-proof, which makes it the number most DTC operators steer by once spend exceeds roughly $50k/month.