Calculate your return on ad spend (ROAS) and compare it to your break-even ROAS based on profit margin.
Frequently Asked Questions
How do you calculate ROAS?
ROAS = Revenue from ads / Amount spent on ads. A ROAS of 4 means you earn $4 in revenue for every $1 spent on advertising.
What ROAS is considered good?
It depends on your profit margin. A common target is 4x, but a business with a 20% margin needs at least 5x ROAS to break even, while a 50% margin business only needs 2x.
How do I calculate my break-even ROAS?
Break-even ROAS = 100 / profit margin percentage. For example, at a 25% margin, you need at least a 4x ROAS just to cover ad costs.