If you're running paid campaigns and you're not tracking ROAS, you're flying blind. ROAS — Return on Ad Spend — is the single number that tells you whether your marketing is actually working or just burning money.
What does ROAS mean?
ROAS measures how much revenue you earn for every rupee you spend on advertising. The formula is brutally simple:
ROAS = Revenue generated ÷ Ad spend
Example: You spend ₹10,000 on Meta ads and generate ₹40,000 in sales. Your ROAS = 4x (or 400%).
What is a good ROAS?
This is where most beginners get confused — there's no universal "good" ROAS. It depends entirely on your margins.
- Low margin business (e.g. electronics): You need 6x–8x ROAS just to break even
- Medium margin business (e.g. apparel): 3x–4x ROAS is typically profitable
- High margin business (e.g. digital products): Even 2x ROAS can be excellent
The number that matters isn't your ROAS — it's your break-even ROAS. Calculate that first, then optimize toward it.
How to calculate your break-even ROAS
Break-even ROAS = 1 ÷ Gross margin percentage
If your gross margin is 40%, your break-even ROAS = 1 ÷ 0.4 = 2.5x. Anything above 2.5x is profitable. Anything below is losing money.
Why ROAS is just the start
ROAS tells you if a campaign is profitable — but it doesn't tell you if you're scaling efficiently. That's where metrics like MER (Marketing Efficiency Ratio) and blended ROAS come in. But master ROAS first.
Ready to crack ROAS on a real campaign?
The ROAS Cracker badge on ScaleBiz Academy tests your ability to optimise a real campaign from 1.2x to 4x. Think you can do it?
Take the challenge →