Is a 2, 3 or 4 ROAS Good?
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Written by Christopher Krassnig, Founder & CEO of ZenoX Media. Answers every question here from the accounts ZenoX runs, not from theory.
The short answer
A 2, 3 or 4 ROAS is good only when it beats your break-even. Break-even ROAS is 1 divided by your margin, what you keep from each sale after costs. So a 2 breaks even at a 50% margin, a 3 at about 33% and a 4 at 25%. At ZenoX we judge each store against its own line and its real Shopify orders.
Where a 2, 3 and 4 ROAS Break Even
ROAS is sales divided by ad spend. A 3 ROAS means 3 euros of sales for every 1 euro of ads. On its own, that tells you nothing. What matters is how much of each sale you keep.
That part is your margin. It is what is left of a sale once the product, shipping, payment fees and returns are paid, before any ad money. Break-even ROAS is 1 divided by that margin as a decimal, so a 40% margin is 1 divided by 0.4, which is 2.5. Flip it around and you get the margin each ROAS needs just to stand still.
A 2 ROAS breaks even at a 50% margin.
A 2.3 ROAS breaks even at about 43%.
A 3 ROAS breaks even at about 33%.
A 3.8 ROAS breaks even at about 26%.
A 4 ROAS breaks even at 25%.
So a 3 is great for a brand keeping 60% of each sale. For a dropshipper keeping 25%, the same 3 is a loss.
What Each ROAS Earns per 100 Euros of Ads
Here is the money, not the multiple. Say you spend 100 euros on ads.
At a 40% margin, a 2 ROAS brings 200 euros of sales and keeps 80. You lose 20. A 3 brings 300 and keeps 120, so you make 20. A 4 brings 400 and keeps 160, so you make 60.
At a 30% margin, a 2 loses 40. A 3 still loses 10. A 4 makes 20.
This profit is before your fixed costs. Apps, staff and your own wage come out of it too. So aim above break-even with room to spare, not right on the line. A 3 on a 50% margin puts more in the bank than a 4 on a 25% margin.
The ROAS Checkpoints We Use Before Scaling
These are our own rules from the accounts we run, not Google's, and they sit on top of each store's own margin.
A new account at around 50 euros a day is fine at 1.5 to 1.7 ROAS. That is enough to keep pushing while Google learns. The same 1.5 at 500 euros a day on a mature account is a problem we fix.
At 2.0 to 2.2 we usually hold. On a store with enough margin, that covers costs but leaves too little profit room to push harder. If a store's break-even sits above 2.2, that range is a loss, not a hold. At 2.3 and up we go harder. At 2.7 and up we make big budget jumps.
A high number on tiny volume is not a green light. A 4 ROAS on 5 sales a week usually means the budget or targeting is too tight. Open it up, and expect ROAS to soften a little as volume grows.
One real example: a home decor store we run went from a 3.2 to a 3.7 ROAS in 60 days at the same 45,000 euros a month in spend. That store, not a promise.
Check the Number Before You Trust It
Never judge ROAS on one day. Google keeps adding sales for several days after the click, so today and the last few days are still incomplete. Judge a settled window of at least 7 to 14 days, and leave today out. Then hold it against your real Shopify orders, not only what Google reports.
If you bid with Target ROAS, Google wants it as a percent. A 3 ROAS is a target of 300%. Google's own help page warns that a target set too high can limit your traffic. Start near what the campaign already does, then move it in small steps.
If you run the account yourself, our free Google Ads eCom Lab on Skool has a weekly question thread where you can bring your numbers. We run it, so it points back to us too. As an agency we only take stores spending at least €10K a month on ads.
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