ROAS is revenue from ads divided by ad spend: $40,000 of revenue from $10,000 of spend is a 4.0x ROAS. The same result can be written 400% or 4:1. A ROAS is only good if it clears your break-even ROAS, which is 1 divided by your contribution margin. Across industries, achieved ROAS runs from about 2.3x in healthcare to 8.0x in legal services, with general ecommerce near 4.0x.
What is ROAS?
ROAS, or return on ad spend, is the revenue an advertising campaign produced divided by what the campaign cost. A campaign that generated $40,000 from $10,000 of spend returned 4.0x. It is the most quoted number in performance marketing because every ad platform reports it natively and it needs no data the platform does not already hold.
That convenience is also its weakness. ROAS measures revenue, not profit, so it says nothing about whether a campaign made money. A 4.0x looks strong until you subtract product cost, shipping, payment fees and returns. Two brands reporting an identical 4.0x can sit on opposite sides of profitability.
ROAS, ROI and ACOS are the same measurement
The three are arithmetic rearrangements of each other, which is why this calculator returns all of them. ROAS counts gross revenue against spend. ROI subtracts the spend first, so a 4.0x ROAS is a 300% ROI. ACOS inverts the ratio and states it as a percentage, so a 4.0x ROAS is a 25% ACOS. Amazon advertisers tend to work in ACOS, Meta and Google advertisers in ROAS, and finance teams in ROI.
Confusion usually comes from the percentage form. A 400% ROAS and a 4.0x ROAS are identical, but a 400% figure is easily misread as a 400% profit when it is a fourfold revenue return before any cost is taken out.
What is a good ROAS?
There is no universal answer, and any number quoted without reference to margin is guesswork. The widely repeated 3:1 rule of thumb is a starting reference, not a target. A 3.0x is comfortable for a software business at 85% margin and a loss for a reseller at 20%.
The only benchmark that decides the question is your break-even ROAS, which is 1 divided by your contribution margin. Work that out first, then judge the ROAS above against it. Anything below break-even is buying revenue at a loss regardless of how healthy the multiple looks.
ROAS benchmarks
Benchmarks are a sanity check, not a target. Your own account history on the same audience and placement is always the better comparison, but these are the numbers to reach for when you have none.
Average achieved ROAS by industry
A performance figure, not a break-even one. Whether it is good depends on your own margin.
| Industry | Average ROAS |
|---|---|
| Legal services | 8.0x |
| Travel and hospitality | 6.5x |
| Toys and games | 6.0x |
| Art and collectibles | 5.1x |
| B2B and technology | 5.0x |
| Real estate | 5.0x |
| Home services | 5.0x |
| Supplements and health (DTC) | 4.5x |
| Apparel and fashion | 4.3x |
| Sporting and fitness | 4.3x |
| Beauty and personal care | 4.2x |
| Pet products | 4.1x |
| Jewellery and accessories | 4.0x |
| Ecommerce (general) | 4.0x |
| Consumer electronics | 3.8x |
| Food and beverage | 3.6x |
| Healthcare | 2.3x to 3.5x |
Source: ROAS benchmarks by industry
Frequently asked questions
How do you calculate ROAS?
Divide the revenue attributed to your ads by what you spent on them. $40,000 of revenue from $10,000 of spend is a 4.0x ROAS. The same figure can be stated as 400% or as a 4:1 ratio; all three mean four dollars of revenue for every dollar spent.
What is the ROAS equation?
ROAS = revenue from ads divided by ad spend. To express it as a percentage, multiply by 100. To convert it to ACOS, divide 1 by the ROAS and state the result as a percentage, so 4.0x becomes 25% ACOS. To convert it to ROI, subtract 1 and state as a percentage, so 4.0x becomes 300% ROI.
Is a 3x ROAS good?
It depends entirely on your contribution margin. At a 33% margin, 3.0x is exactly break-even, so the campaign made nothing. At a 60% margin, 3.0x is comfortably profitable. Calculate your break-even ROAS before deciding whether any multiple is good.
How do I calculate target ROAS?
Target ROAS is 1 divided by (contribution margin minus the profit margin you want). A brand keeping 28 cents of contribution on the dollar that wants 15% net profit needs 1 divided by 0.13, or a 7.7x target ROAS. Google's Target ROAS bidding expects this figure as a percentage, so 7.7x is entered as 770%.
How do I convert ROAS to ACOS?
They are reciprocals. ACOS equals 1 divided by ROAS stated as a percentage, so a 4.0x ROAS is a 25% ACOS and a 2.5x ROAS is a 40% ACOS. Going the other way, a 20% ACOS is a 5.0x ROAS. Amazon advertisers work in ACOS; Meta and Google advertisers work in ROAS.
What is a good ROAS for dropshipping?
Higher than most brands need, because dropshipping margins are thinner and refund rates are higher. Supplier cost is usually a large share of the sale price and returned units are rarely worth reclaiming, so break-even often sits near double what a margin-only calculation suggests. Work out your break-even ROAS before adopting any target.
What is the difference between ROAS and ROI?
ROAS counts gross revenue against ad spend; ROI counts profit against ad spend. A 4.0x ROAS is a 300% ROI on the ad spend alone, but true ROI should also account for product cost, shipping, fees and overhead, which ROAS ignores entirely.
Related calculators
Measuring is the easy half
Every metric on this page is something your ad account already knows. The work is acting on it while the auction is still open. Hawky’s Performance Agent reads them live, buys against your KPI, and logs every decision with the data that triggered it: reversible, guardrailed, and running whether or not anyone has the dashboard open.
