What is a good ROAS? Break-even ROAS for SaaS and ecommerce

Composite example: a store owner sees a 4.0 ROAS in Meta Ads Manager. Her margin after product cost, shipping and fees is 30%, so break-even is 3.3. In Shopify, orders her own tracking ties to Meta add up to a 2.6 ROAS. She was losing money on every sale. (Made-up example, not a real company or Kratly customer.)

A good ROAS depends on your margin, your goal and how you measure it. The basic break-even table by margin is in when to pause a Google Ads campaign. This guide goes further.

ROAS vs ROI vs MER vs POAS: what's the difference?#

ROAS (return on ad spend) is the revenue your ads bring in divided by what you spent on them. A ROAS of 3 means $3 of revenue for every $1 of ad spend.

ROAS ignores costs. Three other ratios fill the gaps.

ROAS vs ROI: ROAS is a revenue ratio, ROI a profit ratio. A ROAS of 3 can hide a negative ROI if your margin is thin.

MER, sometimes called blended ROAS, uses all revenue, so attribution can't fool it. It also can't tell you which campaign to cut. POAS takes the margin out first, so break-even POAS is always 1.0.

A worked example (illustrative numbers)#

These numbers are made up to show the math. They are not from a real company.

A store spends $40,000 in a month on Google Ads and Meta. It also pays a $5,000 agency fee. Its margin after product cost, shipping, payment fees and refunds is 40%.

Break-even ROAS at 40% margin is 2.5, so 3.0 clears it, and POAS of 1.2 says the same. But after the agency fee, paid ads made only $3,000. The platforms also claimed $50,000 more revenue than the store's own tracking found.

Why "4:1 is a good ROAS" misleads#

Rules like "aim for 4:1" get repeated in forums and agency decks. They fail for four reasons.

1. Margin. At 20% margin, 4:1 loses money. At 80%, 4:1 is very profitable and you're likely underspending.
2. Different revenue. A 4:1 in Meta, in Google and in Shopify measure different things.
3. Goals. A brand buying repeat customers can run below break-even on the first order. A store short of cash can't.
4. Scale. A ROAS of 8 on $500 a month may be worth less than 3 on $20,000.

How do you set a target ROAS by margin and goal?#

Start from break-even: 1 ÷ gross margin (Amazon Ads). Then adjust for your goal.

• Profit goal: target ROAS = 1 ÷ (margin − profit share you want). A 10% share at 40% margin gives 1 ÷ 0.30 = 3.33.
• Growth goal: target ROAS = 1 ÷ (margin × revenue multiple over your payback window). If a buyer spends twice their first order within 12 months, the multiple is 2.

These are illustrative targets from the formulas, not benchmarks. The growth column holds only if repeat revenue really shows up in your cohorts.

I'd run accounts with two numbers: a floor (break-even) and a goal. Above the goal, add budget. Between the two, fix. Below the floor after enough data, cut. For budget size, see how much to spend on Google Ads.

First-order vs lifetime ROAS for subscriptions and repeat buyers#

First-order ROAS counts only the first payment. Lifetime ROAS counts all revenue the customer brings over a set window, often 6 or 12 months.

For SaaS, first-order ROAS is nearly useless. Take an illustrative $100-a-month product with 80% gross margin and $600 ad cost per paying customer. First-month ROAS is 0.17. If customers stay a year, 12-month ROAS is 2.0, and payback on gross profit is 7.5 months.

So measure ROAS on Stripe payments by acquisition month, at 1, 3, 6 and 12 months. Judge campaigns on cost per paying customer; CAC by channel shows how to count the cost side.

Repeat-purchase stores, like a coffee brand, often earn back acquisition on the second or third order. Use 90- or 180-day ROAS there. Keep first-order ROAS for one-off products.

Platform-reported vs incremental ROAS#

Platform ROAS counts every sale the platform can claim. Incremental ROAS counts only sales that would not have happened without the ads. It's lower, sometimes by a lot.

The best-known proof is eBay's. When eBay paused brand search ads, 99.5% of the lost paid clicks came back through organic search. For non-brand search, researchers estimated a return of −63% (NBER, Blake, Nosko and Tadelis).

Brand searches inflate platform ROAS (test your brand bidding). So do view-through credit and overlap between platforms. One Meta ads educator lists current defaults as 7-day click, 1-day engage-through and 1-day view (Jon Loomer).

To find incremental ROAS, run a holdout. Google's Conversion Lift has a $5,000 minimum budget (Google Ads Help). Google opened it to Search and Performance Max as self-serve on October 7, 2026 (Search Engine Land). Smaller budgets can use a geo or time holdout, covered in did your marketing change really work? and in incrementality testing on a small budget.

Google Ads ROAS and Meta Ads ROAS settings#

Google Ads ROAS: target ROAS bidding#

Google Ads shows ROAS as Conv. value / cost; target ROAS takes a percentage. Google's example: $5 in sales ÷ $1 in ad spend × 100% = 500% target ROAS (Google Ads Help).

Minimum data, per the same page:

The bigger issue is what you call "value." If it's a sign-up or a guess, target ROAS chases the wrong thing. Send real payment amounts, or gross profit, which turns the target into a POAS target. Fix the leaks in Google Ads wasted spend first.

Meta Ads ROAS: purchase ROAS and minimum ROAS#

Meta reports purchase ROAS as total purchase conversion value divided by total spend. Its minimum ROAS bid strategy sets a floor on that ratio. Meta notes that "setting the benchmark too high may lead to under-delivery" (Meta for Developers).

Value optimization needs enough purchases. Commonly reported thresholds are about 30 purchases with 5+ different values in 14 days (Jon Loomer). For SaaS, the fix is to send real Stripe payment values back to Meta, as in Facebook ads for SaaS.

What do published ROAS benchmarks say?#

Few reliable ROAS benchmarks exist. Two are worth knowing.

• Triple Whale (vendor data, 2024). The median ROAS for brands advertising on its platform was 2.04 (Triple Whale). That covers Triple Whale customers only, measured its way.
• Google's Economic Impact report. Google assumes businesses make $2 in profit for every $1 spent on Google Ads, based on a 2009 paper by Hal Varian (Google Economic Impact). That's an economic estimate, not a ROAS benchmark. Some posts quote it as 2:1 ROAS, which is a different claim.

A median of 2.04 suggests many stores run near break-even. Your margin, not a median, sets your number.

How to do this in Kratly#

A note on bias: Kratly sells software for measuring ad revenue. Everything above works in a spreadsheet too. For what an AI tool should and shouldn't do with your budget, see AI marketing agent: what it can do, what it can't, how to choose.

1. Run the free wasted-spend checker. Upload your Google Ads search terms report; it runs in your browser and flags searches that spend without converting.
2. Connect Google Ads, Meta, and Stripe or Shopify. Kratly ties each campaign to the payments it brought, counting each sale once.
3. Compare each campaign with your break-even. Work out break-even ROAS from your margin as shown above, then check each campaign's revenue per dollar against it.
4. Approve suggested changes. You approve each budget move; every change is logged and reversible.