A good ROAS is one that stays above your break-even ROAS, which is 1 divided by your gross margin. A store with a 40% margin breaks even at 2.5, so anything clearly above that is profitable. There is no universal number, because margin, repeat purchases and delivery costs change the answer for every business.
What does ROAS mean?
ROAS stands for return on ad spend. It is the revenue the ads generate divided by what you spent on them. If you spend PKR 100,000 and the ads bring PKR 430,000 in purchases, your ROAS is 4.30.
ROAS tells you how hard each rupee of ad spend is working. It does not tell you whether you made a profit, because it ignores the cost of the product, delivery and returns.
How do you work out your break-even ROAS?
Break-even ROAS is 1 divided by your gross margin. It is the point where the ads pay for themselves and nothing is left over.
Example: you sell a product for PKR 5,000 and the product, packaging and delivery cost PKR 3,000. Your gross margin is 40%. Break-even ROAS is 1 ÷ 0.40 = 2.5. At a ROAS of 2.5 you earn nothing from the sale. At 4.0 you keep real profit after ad cost.
- Margin 20%: break-even ROAS is 5.0
- Margin 30%: break-even ROAS is 3.3
- Margin 40%: break-even ROAS is 2.5
- Margin 50%: break-even ROAS is 2.0
What ROAS should you aim for?
Aim for a ROAS comfortably above break-even, with enough room to cover the costs that are not in the margin, such as returns, staff time and tools. Build in a cushion above break-even, then adjust once you see real numbers.
Be careful with copying benchmarks from other stores. A brand with a 60% margin and many repeat buyers can run happily at a low ROAS. A brand with a thin margin and one-time buyers cannot.
How did HealthCart raise its ROAS?
In our HealthCart case study, the account moved from a ROAS of 4.30 to 8.35 in the first month after onboarding. Spend fell by 22% while purchases doubled, and cost per purchase dropped from PKR 667 to PKR 259.
The gain came from efficiency, not from spending more: better creative, cleaner structure and cutting what did not convert.
What are the fastest ways to improve ROAS?
Improve the three things that multiply together: how many people click, how many of them buy, and how much each order is worth.
- Test several creatives in the same campaign and scale only the winner
- Fix the landing page and checkout so more clicks become orders
- Raise average order value with bundles and free-delivery thresholds
- Switch off ad sets that spend without producing purchases
- Track purchases correctly with the Meta Pixel and server events, so the ROAS you see is real
Frequently asked questions
Is a ROAS of 3 good?
It depends on your margin. At a 40% margin, break-even is 2.5, so a ROAS of 3 is only a small profit. At a 60% margin, break-even is about 1.7, so 3 is healthy.
Is ROAS the same as ROI?
No. ROAS compares revenue to ad spend. ROI compares profit to total cost, so it also includes product cost, delivery and other expenses.
Can ROAS be too high?
Yes. A very high ROAS can mean the budget is too small and you are only reaching your warmest buyers. Raising budget in steps usually lowers ROAS a little but brings more total profit.