What is a good ROAS for e-commerce?

A good ROAS for an online store is a return comfortably above your own break-even point, and that point comes from your margin, not from an industry average. Break-even ROAS is one divided by the share of each order you keep after product cost, shipping, payment fees and returns. Above it, each order leaves some contribution toward your fixed costs and profit, as long as the sales you are counting are real.

The question usually arrives with a number already attached. Someone heard that 4x is healthy, or that 3x is the minimum, and wants to know whether their account measures up. Those figures can be right for one store and ruinous for another, because two brands with the same ROAS can keep very different amounts from each order. This guide shows how to work out the number that is right for yours, and how to check it against what the business actually sold.

Why there is no universal good ROAS

ROAS, return on ad spend, is revenue divided by ad spend. It says nothing about what that revenue cost you to deliver. A brand selling a product with a high markup can make money at a return that would bankrupt a brand selling low-margin goods with free shipping.

That is why benchmark tables are close to useless for a decision. They average together stores with different margins, prices, return rates and repeat purchase habits. The only benchmark that matters is the one built from your own costs.

How to calculate your break-even ROAS

Start with what you keep from an average order after the costs that come with it. For most online stores that means these four.

• The cost of the product itself, including packaging.
• Shipping and fulfilment, if you pay for them.
• Payment and platform fees on the order.
• An allowance for returns and refunds, based on your own return rate.

Divide what is left by the order value and you have your contribution margin. Break-even ROAS is one divided by that margin.

Here is a worked example with illustrative numbers, not from any real store. An order is worth EUR 60, excluding VAT or sales tax. The product costs EUR 18, shipping costs EUR 6, payment fees are EUR 2 and the returns allowance is EUR 3. You keep EUR 31, which is about 52% of the order. Because returns are already covered by that allowance, the EUR 60 is gross order value, so refunds are not deducted a second time.

Then decide how much of that margin you want to keep after advertising. If you want half of it to survive, your working floor moves to roughly double break-even. The arithmetic is simple on purpose. The point is that the target comes out of your own costs.

What changes the number

Repeat purchase deserves its own thought. If customers reliably come back, the first order is not the whole value of acquiring them, and you can afford a lower return on it. That is a judgment about your own customers, and it should be made from your own repeat data rather than hoped for.

Why the ROAS your ad platform reports can mislead you

Once you know your floor, you need a number you can trust to compare it with. Platform ROAS is not always that number.

• Two platforms can each claim the same order, so adding up what they report counts one sale twice.
• View-through conversions can credit an ad the buyer may never have noticed.
• Refunds and cancellations can arrive after the platform has already counted the sale.
• Buyers who click on a phone and buy on a laptop can fall out of the count altogether.

Some of these errors inflate the reported return and some deflate it. Either way, a campaign can look above your floor in the ad account while the store tells a different story.

Judge months on MER, not campaign ROAS

The monthly check I use is MER, the marketing efficiency ratio: total sales from the store backend divided by total ad spend across every platform, for the same period. It does not depend on what each platform chose to claim. I explain how to calculate it, and what it can and cannot tell you, in MER vs ROAS.

Your break-even logic applies to MER in the same way, as long as the margin matches the sales you are counting. Use campaign ROAS to rank campaigns and judge tests. Use MER to see whether the month as a whole kept above your floor.

What is a good ROAS for Google Ads?

The same answer applies inside Google Ads. A good ROAS is one above your break-even, measured on conversion values you trust. Keep two numbers apart, though. Your break-even is an economic floor. The target ROAS you enter in a bid strategy is an instruction to the algorithm, and it should sit above that floor by the margin you want to keep.

If you give Google a target ROAS, it bids toward the conversion values it receives. When those values are inflated or incomplete, the bidding optimises toward the wrong number. Clean conversion data comes first. The two GA4 settings in my guide to source groups and hostname filters are a good place to start. Set the target from your floor once the measurement is right, not before.

Common questions

Is 4x a good ROAS for e-commerce?

It depends on your margin. Take two illustrative stores. If one keeps 50% of each order after product cost, shipping, fees and returns, its break-even is 2x, and at 4x the ads use half of that margin, leaving the other half toward fixed costs and profit. If another keeps 25%, its break-even is 4x, so at 4x its revenue covers the variable costs plus the ad spend, with nothing left toward fixed costs. Run the calculation with your own costs before judging the number.

What is the difference between ROAS and break-even ROAS?

ROAS is the return you achieved: revenue divided by ad spend. Break-even ROAS is the return you need before the ad cost exceeds what an order leaves after its variable costs, and it equals one divided by your contribution margin. Comparing the two tells you whether the attributed orders cover their ad cost. It does not prove the ads caused those orders, so check it against MER as well.

Should I use platform ROAS or MER to judge my ads?

Use both, for different jobs. Platform ROAS is useful for comparing campaigns inside one account. MER, total store sales divided by total ad spend, is the better monthly check on the business as a whole, because it does not depend on what each platform chose to claim.

Take your last hundred orders, add up the product, shipping, fee and return costs, and work out what share of the revenue you kept. One divided by that share is your break-even ROAS. It is the number to hold every campaign and every month against.