What Is a Good ROAS? How to Find Your Break-Even ROAS

A good ROAS is any return on ad spend above your break-even ROAS, and break-even ROAS is 1 divided by your margin. At a 50% margin you break even at 2.0x; at 25% you need 4.0x. That is why an industry-average ROAS can't tell you whether your own campaign makes money.

ROAS and Break-Even ROAS

ROAS = revenue from ads ÷ ad spend. Google Ads expresses it as a percentage: $5 of sales for each $1 of ad spend is a 500% ROAS, which is the same as 5.0x.

Break-even ROAS = 1 ÷ margin. Each dollar of revenue leaves you only your margin, so revenue has to be 1 ÷ margin times the ad spend just to pay the ad bill back. For this to work, use your contribution margin per order: the sale price minus product cost, shipping, payment fees and the cost of returns. Gross margin on its own usually overstates it.

Break-Even ROAS at Typical Industry Margins

Gross margins below are for U.S. public companies, compiled by NYU Stern professor Aswath Damodaran from January 2026 data. Your own margin after shipping and fees is likely lower, which pushes your break-even higher.

Finding Your Own Margin Per Order

Start from one typical order and subtract every cost that comes with it. Using assumed figures for a $150 order:

• Product cost: $60.
• Shipping and packaging: $12.
• Payment processing: 3% of $150 = $4.50.
• Returns allowance: 5% of $150 = $7.50.

Contribution per order: $150 − $60 − $12 − $4.50 − $7.50 = $66, or 44%. Break-even ROAS is 1 ÷ 0.44 = 2.27x. Using gross margin alone ($90, or 60%) would suggest 1.67x, and a campaign running at 2.0x would look profitable while losing money on every order.

Using Break-Even ROAS When Setting Bids

If you use automated bidding with a target ROAS, Google Ads takes the target as a percentage. A break-even of 2.27x is 227%, and a target set at or below that number tells the system to aim for spending that returns no profit. Set the target above break-even by the profit you want per order, then watch the result over a few weeks, since automated bidding needs time and conversion data to settle.

Revisit the break-even whenever your costs change. A rise in shipping rates or a supplier price increase moves it even if nothing in the ad account changed.

Platform ROAS vs. Blended ROAS

Each ad platform decides how much credit its own ads get for a sale. Google describes attribution models as the way you "choose how much credit each ad interaction gets for your conversions"; last-click gives all the credit to the last ad clicked, while data-driven attribution spreads it across interactions. A customer who clicked ads on two platforms before buying can be counted by both, so the revenue each platform reports can add up to more than you actually sold.

Blended ROAS is total revenue divided by total ad spend across every channel, taken from your own sales records. It is less flattering but harder to inflate. Neither number tells you whether the sales would have happened without the ads. The direct way to test that is a holdout: pause a channel in one region or period and compare.

When a ROAS Below Break-Even Can Still Make Sense

Break-even ROAS looks at the first order only. If customers reliably buy again, a first-order loss can be recovered later. That is a lifetime value question, covered in our guide to LTV:CAC and CAC payback. Count only repeat purchases you can see in your own data, not hoped-for ones.

What This Doesn't Cover

Break-even ROAS covers variable costs only. It doesn't cover salaries, rent or other fixed costs, and agency or tool fees should be added to ad spend before you divide. It also doesn't cover brand effects that are hard to attribute, or sales tax.

Sources

• Google Ads Help, About Target ROAS bidding (ROAS definition)
• Google Ads Help, About attribution models
• Damodaran, Margins by Sector (US), January 2026 data