Question 1

What is ROAS?

Accepted Answer

ROAS stands for Return on Ad Spend. It measures how much revenue you generate for every dollar spent on advertising. The formula is: ROAS = Revenue from Ads / Ad Spend. For example, if you spend $1,000 and generate $5,000 in revenue, your ROAS is 5x (or 500%).

Question 2

What is a good ROAS?

Accepted Answer

A good ROAS depends on your industry, margins, and business model. As a general benchmark, a 4x ROAS is often considered a minimum target for e-commerce businesses with average margins. High-margin businesses may break even at 2x–3x, while low-margin businesses may need 8x or higher. Always calculate your break-even ROAS based on your own cost of goods and operating expenses.

Question 3

How is ROAS different from ROI?

Accepted Answer

ROAS measures revenue generated per dollar of ad spend, while ROI (Return on Investment) measures profit after accounting for all costs including cost of goods, operating expenses, and ad spend. ROAS is a top-line metric focused purely on revenue and advertising efficiency, whereas ROI gives a fuller picture of profitability.

ROAS Calculator