What is ROAS?
ROAS measures ad conversion value relative to advertising cost. Google Ads describes Target ROAS in terms of conversion value per cost. For example, $5 of conversion value for $1 of ad spend is a 5.0x, or 500%, ROAS.
What is the difference between ROAS and ROI?
ROAS compares ad conversion value with ad spend. ROI is a broader profitability concept that considers the wider cost structure of the business. A 500% ROAS does not mean a 500% profit margin.
What is break-even ROAS?
Contribution before ads is order revenue minus all non-ad costs. Break-even CPA equals the positive contribution before ads, and break-even ROAS is ad platform conversion value divided by that break-even CPA.
How do you calculate break-even ROAS?
If order revenue and ad conversion value are both 50, and non-ad costs are 30, contribution before ads is 20. The break-even CPA is therefore 20, and break-even ROAS is 50 ÷ 20 = 2.50x, or 250%.
Is 300% ROAS profitable?
Not necessarily. Product cost, selling fees, shipping, returns, fixed costs, and tax reserves can make a 300% ROAS profitable for one product and unprofitable for another.
What is break-even CPA?
Break-even CPA is the maximum acquisition cost per order you can pay before profit reaches approximately zero. If you want to preserve a target profit margin, the calculator subtracts your target profit amount from contribution before ads to get the target CPA limit.
How do you calculate target ROAS?
Target ROAS is ad conversion value divided by the target CPA limit. NetPerSale's target-profit ROAS is an economic threshold based on the costs you entered; it is not a guarantee or recommendation from an advertising platform.
What is the difference between ROAS and ACoS?
When both metrics use the same conversion-value or sales basis, ACoS is the inverse of ROAS expressed as a percentage. A 4.0x ROAS corresponds to a 25% ACoS. Break-even ACoS is shown as a secondary metric rather than the main result.
What is a good ROAS?
There is no universal good ROAS. The ROAS you need depends on product margin, selling fees, shipping, returns, fixed costs, and the profit margin you want to keep. Use your own economics instead of a generic industry benchmark.
FAQ
Is a 300% ROAS profitable?
Not necessarily. A 300% ROAS means $3 of conversion value for every $1 of ad spend, but product cost, selling fees, shipping, returns, and other costs determine whether the order is actually profitable.
What is break-even ROAS?
It is the ROAS where your advertising cost uses all of your contribution before ads, leaving approximately zero profit.
Is a higher break-even ROAS better?
No. A lower break-even ROAS generally means your product has more room for advertising because its pre-ad contribution margin is higher.
What is break-even CPA?
It is the maximum acquisition cost per order you can pay before profit reaches zero.
What ROAS should I use for Google Ads?
There is no universal answer. Your minimum economically viable ROAS depends on your own margins and costs. Use campaign history and conversion-value data when setting bidding targets.
Reference
Google Ads uses conversion value per cost for Target ROAS. NetPerSale's break-even and target-profit calculations are independent profitability calculations based on the costs you enter.
NetPerSale is an independent profitability calculator and is not affiliated with Google Ads, Meta Ads, Amazon Ads, or other advertising platforms.