What is a good ROAS for an online store? (And why MER matters more)
There's no universal good ROAS. Your break-even ROAS is 1 divided by your contribution margin before marketing: at a 40% margin, break-even is 2.5. But steer by MER and nCAC, because platform ROAS overstates results and double-counts sales.
What is ROAS?
Return on Ad Spend = revenue from ads ÷ ad spend. A ROAS of 4 means 4 in revenue for every 1 spent on ads.
How to calculate your break-even ROAS
Break-even ROAS = 1 ÷ contribution margin (after cost of goods, shipping and fees).
- Margin 30%: Break-even ROAS 3.3
- Margin 40%: Break-even ROAS 2.5
- Margin 60%: Break-even ROAS 1.7
Why ROAS can mislead you
- Each platform claims credit for the same sale.
- Retargeting shows high ROAS but rarely creates new demand.
- A high ROAS on a small budget often means you're only reaching people who were already ready to buy.
MER: the full picture
MER = total revenue ÷ total marketing spend. Attribution can't inflate it, and it tells you whether your marketing works as a whole.
nCAC: the price of growth
Track what a new customer costs. If nCAC holds steady while spend grows, you're scaling in a healthy way.
What this means in practice
Accept a lower ROAS on cold-traffic campaigns if they bring in new customers and lift MER. At Makerz we steer Meta spend towards blended nCAC and MER. See our Meta Ads approach and framework.
Examples from our cases
- ÖHOUSE (Danish fashion brand): +122% revenue and +222% EBITDA in 9 months (case).
- Scanovus (Danish DTC brand selling in the EU and US): +1,200% revenue growth, +770% more orders and +1,300% growth in spend (case).
Scanovus shows that spend can grow sharply when the overall economics hold up.
Try our free calculators for MER and break-even ROAS on the learning page.
What's a good ROAS on Facebook ads?
It depends on your margin. Calculate your break-even ROAS, then measure on MER rather than industry averages.
Is a ROAS of 2 bad?
Not necessarily. With a 60% margin, it's above break-even.
What's the difference between ROAS and ROI?
ROAS looks at revenue, ROI at profit.
How do I calculate break-even ROAS?
1 divided by your contribution margin. At a 40% margin, break-even ROAS is 2.5.