ROAS (return on ad spend) is the revenue attributed to your ads divided by what you spent on them. A good ROAS is any figure above your break-even ROAS, which is 1 divided by your contribution margin. A 40% margin means break-even at 2.5; a 25% margin means 4.
What is ROAS?
ROAS (return on ad spend) is the revenue attributed to your ads divided by the amount you spent on them. If you spend ₹10,000 and the ads are credited with ₹40,000 of sales, ROAS is 4 (or “4×”): every rupee of ad spend is credited with ₹4 of sales. ROAS is not profit. It ignores the cost of the product, shipping, payment fees, returns, cash-on-delivery losses and the agency’s fee.
What is break-even ROAS?
Break-even ROAS is the ROAS at which your ads earn exactly what they cost, and it equals 1 divided by your contribution margin. Contribution margin is the share of each sale left after product cost, shipping, payment fees and expected returns, but before ad spend and overheads.
| Contribution margin | Break-even ROAS | What it means |
|---|---|---|
| 60% | 1.67 | You make money above ROAS 1.67 |
| 40% | 2.50 | You make money above ROAS 2.5 |
| 25% | 4.00 | You need ROAS above 4 just to break even |
| 15% | 6.67 | Ads are hard to run profitably |
What is a good ROAS?
A good ROAS is one comfortably above your break-even ROAS, not a universal number. A ROAS of 3 is excellent for a 60%-margin product and a loss for a 25%-margin one. Be wary of anyone who quotes a “good ROAS” without asking your margin.
A worked example from a real account
My Sneaker Studio’s March 2026 view in Meta Ads Manager shows ₹8,68,244 of purchase value on ₹67,630.86 of spend: ₹8,68,244 ÷ ₹67,631 = 12.84. If the brand’s contribution margin were 35% (an illustration, not their number), break-even ROAS would be 2.86 and ads at 12.84 would leave a large cushion for returns, overheads and the agency fee. See the screenshots. Note that this is Meta-reported purchase value, not store revenue.
Why Meta-reported ROAS is not the whole story
- Attribution. Meta credits purchases to ads using its own window (for example 7-day click). Some of those buyers would have bought anyway.
- Returns and cancellations. Revenue that comes back is still counted unless you adjust.
- Cash on delivery. Orders refused at the door cost shipping and ad spend.
- Single-ad peaks. A ROAS of 20 on one ad spending ₹2,754 is a data point, not the account’s ROAS. The blended figure for the month is the one to plan around.
What is blended ROAS (MER)?
Blended ROAS, or marketing efficiency ratio (MER), is total revenue divided by total marketing spend across all channels. It is harder to flatter than a platform’s own ROAS because it uses your store’s revenue.
How do you improve ROAS?
Raise the average order value (bundles, thresholds), improve the conversion rate (page speed, trust, price clarity), replace tired creative and cut campaigns below break-even. Our ROAS and break-even calculator shows where your numbers sit.
Key takeaways
- ROAS = revenue attributed to ads ÷ ad spend.
- Break-even ROAS = 1 ÷ contribution margin.
- A good ROAS is one above break-even, not a fixed number.
- Read blended monthly ROAS, not a single ad’s peak.