What is a good ROAS?
A good return on ad spend is not a fixed number. It depends on your gross margin, and your break-even line decides it.
By the GrowthCalc team · Updated June 2026
What counts as a good ROAS
ROAS is revenue divided by ad spend. A 4.0x ROAS means you earn 4 in revenue for every 1 you spend on ads. On its own that number does not tell you whether a campaign makes money, because revenue is not profit. What turns ROAS into a verdict is your gross margin: the share of each sale left after the cost of the goods or service sold.
The line that matters is your break-even ROAS, the point where revenue from a campaign exactly covers both the cost of goods and the ad spend. It is worked out as 1 divided by your gross margin. At a 50% margin you keep 0.50 of every 1 in revenue, so you need 2 in revenue to cover 1 of spend, a break-even ROAS of 2.0x. Anything above your break-even ROAS is profitable; anything below loses money. So a good ROAS is simply one that sits comfortably above your own break-even line, with enough headroom for the profit margin you want.
This is why a single target like aim for 4x can be misleading. For a high-margin software business, 4x is far more than it needs. For a low-margin reseller, 4x might still be a loss. The honest answer is margin-first, not a fixed number.
Gross margin to break-even ROAS
Break-even ROAS is the lowest ROAS at which a campaign stops losing money. It depends only on your gross margin. Find your margin in the table below to read off the ROAS you have to beat. A good ROAS is then anything meaningfully above that figure.
| Gross margin | Break-even ROAS | What a good ROAS looks like |
|---|---|---|
| 20% | 5.00x | Above 5x to profit; thin-margin retail and resale |
| 25% | 4.00x | Above 4x; where the classic 4x rule comes from |
| 33% | 3.00x | Above 3x; typical consumer goods |
| 50% | 2.00x | Above 2x; healthy ecommerce and many services |
| 75% | 1.33x | Above 1.33x; software and high-margin digital |
The pattern is consistent: the higher your margin, the lower the ROAS you need, because more of every sale is left to cover the ad cost. To find the exact line for your own margin, use the break-even ROAS calculator, then compare your live campaigns against it.
Is 2x, 3x or 800% ROAS good?
These are the numbers people search for most, and the answer to all of them is the same: it depends on the margin. Here is how each common figure reads.
- 2x ROAS. Break-even for a 50% margin business. At 50% it covers costs but makes no profit; above 50% it is profitable, below 50% it loses money. Fine for high-margin work, marginal for retail.
- 3x ROAS. Profitable for businesses with a gross margin of about 33% or higher. This is roughly average for consumer goods, which is why 3x to 4x became a popular rule of thumb. For a 20% margin business, 3x is still a loss.
- 800% ROAS (8x). Strong for almost any margin, since break-even ROAS rarely climbs above 5x. A ROAS this high can also be a sign you are underspending: if scaling the budget keeps you well above break-even, there may be untapped demand worth chasing.
Percentages and multiples describe the same thing. An 800% ROAS is 8x; a 350% ROAS is 3.5x. Divide the percentage by 100 to get the multiple. Whichever form you use, judge it against your break-even line, not a headline target.
The 70/20/10 rule in marketing
The 70/20/10 rule is a budget-allocation convention, not a ROAS target. It splits your marketing spend across three risk levels:
- 70% on proven channels and tactics that reliably perform, the core that should run well above its break-even ROAS.
- 20% on scaling newer tactics that show early promise but are not yet fully proven.
- 10% on experiments and unproven bets, where a low or negative ROAS is expected as the cost of learning.
It connects to ROAS through blended performance. Your experimental 10% will often run below break-even by design, so the proven 70% has to carry a higher ROAS to keep the overall blended figure healthy. Treating the split as a portfolio, rather than asking every line item to hit the same number, is the point of the rule.
How to find your own ROAS target
A good ROAS for you is your break-even ROAS plus the profit margin you want to keep. Three steps get you there.
- Work out your gross margin. Take revenue, subtract the cost of goods or service delivery, and divide by revenue. A product that sells for 100 and costs 40 to make has a 60% margin.
- Find your break-even ROAS. Divide 1 by that margin. A 60% margin gives a break-even ROAS of about 1.67x, the floor below which ads lose money.
- Add the profit you want. Break-even keeps you at zero. To keep, say, a 20% profit margin after ad spend, your target ROAS is higher than break-even. The formula is 1 divided by (gross margin minus target profit margin).
That last step is what the ROAS target calculator does: enter your gross margin and the profit margin you want to keep, and it returns the ROAS to aim for. Then measure your live campaigns with the ROAS calculator and compare the two. If your actual ROAS beats your target, the campaign is doing its job; if it sits between break-even and target it is profitable but thin; below break-even it is costing you money.
Treat any benchmark number you read elsewhere as a convention, not a law. ROAS norms vary widely by channel, product and margin, so your own break-even line is the only figure that gives a campaign a clean verdict.
Frequently asked questions
Is a 2x ROAS good?
It depends on your gross margin. A 2x ROAS means you earn 2 in revenue for every 1 spent on ads. At a 50% gross margin your break-even ROAS is 2.0x, so 2x is exactly break-even: it covers the cost of goods and the ad spend but leaves no profit. At a margin above 50% it is profitable, below 50% it loses money.
Is 3 ROAS good?
A 3x ROAS is good for a typical retail business with a gross margin around 33% or higher, because that is where it clears break-even. For a low-margin business (say 20%) the break-even ROAS is 5.0x, so 3x would still be a loss. The 3x to 4x figure is a rule of thumb for average margins, not a universal target.
Is 800% ROAS good?
An 800% ROAS is the same as 8x: you earn 8 in revenue for every 1 spent. That is strong for almost any margin, since break-even ROAS rarely exceeds 5x. A very high ROAS can also signal that you are underspending and leaving demand unserved, so it is worth testing whether scaling spend keeps you above break-even.
What is the 70/20/10 rule in marketing?
The 70/20/10 rule is a budget-split convention: put about 70% of spend on proven channels that work, 20% on scaling promising newer tactics, and 10% on experiments. It is a way to allocate budget across risk levels, not a ROAS target, but a healthy blended ROAS usually means the 70% core is well above its break-even point.