How to Calculate ROAS: Formula, Break-even and Calculator

What is a good ROAS?

A good ROAS is one above your own break-even. For orientation, real numbers instead of tables from the internet: across our client accounts (several dozen e-commerce accounts in the DACH region, more than 1.8 million clicks between them) the median ROAS is 3.8, with the middle half of accounts between 1.7 and 7.8. A ROAS of 4 is therefore a solid value, still a loss-making business at a 20% margin and a very good one at 50%. Above all, the spread shows one thing: comparing yourself to other shops helps you very little, the comparison with your own break-even is what decides.

ROAS, ACOS, ROI and cost of sale: which one when?

Four metrics that survey the same ground and get confused all the time:

For steering Google Ads campaigns, ROAS is the given, because Google itself works with it. For the question of whether the channel pays off overall, you need to look at profit, which brings us to the most important section of this article.

Why can a high ROAS still be a loss?

ROAS has one blind spot: it treats every dollar of revenue the same. Whether $4,000 in revenue comes from high-margin private label or discounted shelf-warmers is invisible to the metric, and that is exactly where accounts that look good on paper fall apart. Here is the example that shows the difference, two shops with an identical ROAS:

Same ROAS, opposite outcome.

How do I set a target ROAS in Google Ads?

In Google Ads the bidding strategy is called Target ROAS, and it is entered as a percentage: a target of 4x means 400%. Google's requirement: search and Shopping campaigns need at least 15 conversions in the past 30 days, and for Shopping campaigns that counts per Merchant Center ID. Below that the algorithm lacks the data and results fluctuate.

For the level of the target, one simple order applies: start roughly at your actual ROAS of the past few weeks, not at the number you wish for, then move the target step by step towards break-even plus a buffer. Enter an unrealistically high target and you do not get a better ROAS, you get less impression share, because Google only bids on the safest auctions.

Since mid-August 2026 the target you enter carries even more weight: Google now steers budget-constrained campaigns to the value you entered as well. The old side effect, where tightly budgeted campaigns ran well above their target because Google only picked up the cheapest conversions, is gone. The target is no longer a rough direction, you get what you ordered, which is why the order has to be right.

How do I factor shipping costs into target ROAS?

You subtract your shipping cost per order from your margin before you work out break-even. ROAS in Google Ads only counts the revenue your shop reports. It never sees how much of that goes to the carrier.

What matters is that shipping is charged per parcel, not per dollar of revenue. On a small order it eats a large share of your margin, on a large one it barely registers. Here is how far it moves break-even on a $60 order at a 40% gross margin:

Two products with the same price and the same margin therefore need a ROAS of 3.33 or 6.67 just to pay for their advertising, depending on whether they ship as a parcel or as bulky freight. Your target ROAS belongs above that, with a buffer.

That is why weight matters so much. Heavy and bulky products cost more to ship and so have a higher break-even. Put them in one campaign with light products under a shared target ROAS, and the target is either too low for the heavy items or too high for the light ones.

The answer is separate targets per shipping class. Shipping weight and shipping label in Merchant Center will not get you there directly, because product groups in Google Ads can only be split by attributes such as brand, category, product type, item ID or custom label. So also write the shipping class into a custom label, say “parcel” and “bulky”, and give each class its own campaign with its own target ROAS. It is the same logic as POAS above, except that here shipping makes the difference.

If the customer pays for shipping, you only count the difference: if the parcel costs you $6 and the customer pays $4.90, you carry $1.10. Also check whether that shipping fee is part of the conversion value your shop reports to Google. If it is, Google counts it as revenue even though the money goes straight to the carrier, and your measured ROAS looks better than it is. The cleanest setup reports the value of the goods without the shipping fee, so your calculation and your measurement match.

With free shipping above a minimum order value, you carry the full parcel cost yourself above the threshold. Calculate those orders with the full amount, because just above the threshold shipping is at its most expensive relative to the order.

The ROAS calculator above runs the whole thing with your own numbers, shipping included.

Why is my measured ROAS wrong?

Before you steer with ROAS, the number itself has to be right, and there are four classic sources of error:

The most common case is a static order value in conversion tracking: every order is counted with the same value, whether it brings in $30 or $800, which makes the measured ROAS worthless. For how to set up dynamic value tracking, see our JTL setup guide.

Then there is conversion delay: purchases are attributed to the day of the click, sometimes days later, which is why last week's ROAS always looks too low.

The third source is double counting, when Google Ads, Meta and your shop backend each claim the same order for themselves and the sum of channel revenues exceeds your actual revenue.

And fourth, the gross and net mix: pass gross revenue including cancellations and returns to Google and you make yourself richer than you are. Broken value tracking, incidentally, is the first thing Ginny checks on newly connected accounts, because without clean values every ROAS decision is flying blind.