How to calculate ROAS, and the break even ROAS that actually matters

How do I find my ROAS?

Divide the revenue an ad campaign generated by what you spent on it. If a campaign spent $500 and produced $2,000 in sales, ROAS is $2,000 ÷ $500 = 4, or 4:1. Use revenue attributed to the ads for a single campaign, or all sales over all ad spend for a blended, whole account ROAS.

• Pick a time window (a week, a month, a single campaign).
• Add up the ad spend in that window.
• Add up the revenue those ads generated in that window.
• Divide revenue by spend. That is your ROAS.
• Multiply by 100 if you prefer it as a percentage: a ROAS of 4 is 400%.

The trap is the revenue number. Ad platforms report the revenue they claim credit for, and Meta and Google both count sales they only touched. That is why a healthier measure is blended ROAS, covered below, which uses your actual total sales rather than each platform's own scorecard.

What is a good ROAS?

A commonly cited rule of thumb is that a ROAS of 4:1, four dollars back for every one spent, is healthy for ecommerce. But there is no universal good ROAS, because a good ROAS depends entirely on your margin. A store with a 70 percent margin can thrive at a ROAS of 2; a store with a 25 percent margin loses money at a ROAS of 3.

This is why questions like "is 2.8 a good ROAS" or "is 5x ROAS good" have no answer without your margin. A 2.8 ROAS is comfortably profitable on a high margin product and a loss on a thin one. Before you judge any ROAS, work out the one number your margin actually requires: break even ROAS.

What is break even ROAS?

Break even ROAS is the ROAS at which an ad sale exactly covers its own costs, no profit and no loss. It is one divided by your gross margin. If your gross margin is 40 percent, break even ROAS is 1 ÷ 0.40 = 2.5, so every advertising dollar has to bring back at least $2.50 in sales before the ad makes money. Below 2.5 you are paying to lose.

Break even ROAS turns a vague benchmark into a target you can act on. Instead of asking whether 3 is a good number, you ask whether 3 clears your break even of 2.5, and it does. This is the number to set your campaign goals against, because it is derived from your own costs rather than someone else's store.

Gross margin is the common shorthand, and it is close enough for a quick check. The stricter version divides one by the margin left after every variable cost except advertising, so payment fees and the shipping you absorb come out first. That number is a little higher and a little more honest, because it is the margin advertising genuinely has to be paid from. Our calculator uses the stricter version.

Blended ROAS vs platform reported ROAS

Blended ROAS is your total sales divided by your total ad spend across every channel. Platform reported ROAS is what Meta or Google each claim inside their own dashboard. Blended ROAS is almost always lower and almost always more honest, because platforms both take credit for the same sales, so their numbers add up to more revenue than your store actually made.

If Meta reports a 4 ROAS and Google reports a 4 ROAS, it is tempting to think the whole account is running at 4. It rarely is. Both may be counting the same customer, and neither sees the sales that came from email, organic search or word of mouth. Blended ROAS sidesteps the double counting by ignoring attribution entirely: all sales, all spend, one honest ratio.

ROAS vs ROI vs MER

ROAS is revenue divided by ad spend. ROI is profit divided by total investment, so it accounts for costs ROAS ignores. MER, marketing efficiency ratio, is total revenue divided by total marketing spend, which is effectively blended ROAS under a different name. ROAS judges an ad; ROI judges whether the money was well spent; MER judges the whole marketing engine.

The three answer different questions, so use them together. ROAS is fast and campaign level. MER, or blended ROAS, is the honest account wide health check. ROI is the one that ties back to profit, because it subtracts the product, fees and overhead that a raw ROAS number leaves out.

How to track ROAS across channels on Shopify

Shopify shows your sales but not your ad spend, and each ad platform shows its own spend but claims its own version of your sales. To see a true, blended ROAS you need one place that holds total sales and total spend together. That usually means exporting from each platform into a spreadsheet, or connecting your ad accounts to an analytics app that blends them.

Margio connects your Meta and Google Ads accounts and reports blended ROAS across every channel next to your real sales, and it calculates your break even ROAS from your actual gross margin, so you see both the number you are hitting and the number you need to beat in the same view.

Because Margio already knows your product costs and per order Shopify fees, its break even ROAS is built from your real margin rather than a round number you typed in. When the margin changes, so does the target, automatically.