"What is a good ROAS?" sounds like a simple question, and most answers give a simple number: 3×, 4×, sometimes 10×. The trouble is that one store can get rich on 3× while another loses money on 6×.
ROAS tells you how much revenue came back for each pound or dollar of ad spend. It says nothing about what that revenue cost you to earn. So the only useful answer starts with your own margin.
This guide shows you how to calculate the ROAS you need, how to adjust it for cash on delivery, and how to use it to decide what to scale and what to stop.
What ROAS actually measures
The formula is simple:
The formula ROAS = Revenue from ads ÷ Ad spend |
If you spend EGP 10,000 and the platform reports EGP 40,000 in sales, your ROAS is 4×. That sounds good. But it does not include the cost of the product, shipping, payment fees, your team or orders that never got delivered. ROAS measures revenue efficiency. Profit is a separate calculation.
Why benchmarks mislead you
Published ROAS benchmarks mix different countries, categories, margins and tracking setups. They also rarely tell you whether revenue includes returns. A benchmark can tell you what some other group of advertisers reported. It cannot tell you whether your store is making money.
Two stores with the same 4× ROAS can have very different results:
Store A | Store B | |
|---|---|---|
Selling price | EGP 1,000 | EGP 1,000 |
Product, shipping and fees | EGP 400 | EGP 800 |
Left before ads | EGP 600 | EGP 200 |
Ad cost per order at 4× ROAS | EGP 250 | EGP 250 |
Result per order | EGP 350 profit | EGP 50 loss |
Store A has a healthy business at 4×. Store B needs 5× just to break even. These figures are illustrative, but the arithmetic works the same for your store.
Step 1: Calculate your break-even ROAS
Your break-even ROAS is the point at which a sale covers its own costs and its ad spend, with nothing left over. Below it, you lose money on every sale.
The formula Break-even ROAS = Selling price ÷ Amount left before ads |
Using an illustrative product:
Selling price: EGP 600
Product cost: EGP 240
Shipping and handling: EGP 60
Left before ads: EGP 300
Break-even ROAS: 600 ÷ 300 = 2×
At 2×, you spend EGP 300 on ads to make a EGP 600 sale, and you keep nothing. That is your floor, on paper. In a cash on delivery business, the real floor is higher.
Step 2: Adjust for orders that never pay
Ad platforms usually count an order when the customer checks out. If some of those orders are never delivered, the platform's revenue is larger than what reaches you.
To correct for this, first find your paid order rate: the percentage of placed orders that end up delivered and paid.
The formula Real ROAS = Platform ROAS × Paid order rate |
If the platform reports 4× and 64% of placed orders are paid, your real ROAS is 2.56×. With the 2× floor from the example above, there is still a margin, but much less than the dashboard suggested.
Now turn this around to find the platform ROAS you need to see:
The formula Required platform ROAS = Real ROAS you need ÷ Paid order rate |
To break even at a real 2× with a 64% paid order rate, the platform must show at least 3.13×. A campaign showing 3× in the dashboard looks fine and is actually losing money.
Failed shipments cost money as well. If your outbound and return shipping on undelivered orders is significant, add it to your costs per delivered order. We show how to do this in our guide to reducing cash on delivery returns.
Step 3: Add the profit you want
Break-even is not a goal. Decide what profit per order you want after ads, then work backward.
Keep the example: EGP 600 selling price, EGP 300 left before ads, 64% paid order rate. If you want EGP 100 profit per delivered order:
You can spend EGP 200 on ads per delivered order (300 − 100).
Your real ROAS target is 600 ÷ 200 = 3×.
Your platform ROAS target is 3 ÷ 0.64 = about 4.7×.
This is your good ROAS: the number on the dashboard that delivers the profit you decided on. It came from your costs, not from someone else's benchmark.
Sometimes a lower ROAS is the right call
A higher ROAS is not always better. Small budgets often show a high ROAS because they reach only the people most ready to buy. As you scale, ROAS usually falls while total profit can rise.
Weekly spend | ROAS | Revenue | Left before ads (50%) | Profit after ads |
|---|---|---|---|---|
EGP 10,000 | 5× | EGP 50,000 | EGP 25,000 | EGP 15,000 |
EGP 20,000 | 4× | EGP 80,000 | EGP 40,000 | EGP 20,000 |
EGP 30,000 | 3× | EGP 90,000 | EGP 45,000 | EGP 15,000 |
In this illustration, the middle-ground spend earns the most, even though its ROAS is not the highest. Compare options on profit, not on ROAS.
There are other reasons to accept a lower target for a while:
You have strong repeat purchases. A first order that merely breaks even can be fine if customers reliably come back. Use your own repeat data, not a hopeful guess.
You are clearing old stock. Cash now may be worth more than margin later.
You are entering a new market or launching a new product. Learning has value, but give it a fixed budget and end date.
Don't judge from one dashboard
Platform ROAS is useful but not neutral. Each platform can claim credit for the same sale, and customers often see more than one ad before they buy. Keep three views:
Platform ROAS for decisions inside each channel, such as which ad to keep.
Delivered ROAS for checking whether a campaign really pays, using your store and courier data.
Blended ROAS, which is total revenue divided by total ad spend, for checking the health of the whole store.
If platform ROAS rises while blended ROAS falls, a platform may be taking credit for sales you would have made anyway.
How to raise ROAS without just cutting spend
Fix the offer. A bundle or stronger value can raise revenue per order without raising ad cost. Our Max Muscle campaign rebuilt the offer around perceived value and reached 24× in a seven-day flash sale, on US$2,108 of spend. A short peak campaign like that should not become your everyday target.
Improve creative. Better ads can lower the cost of each sale, and new angles often beat small edits.
Improve the page. A faster, clearer mobile page converts more of the traffic you already paid for.
Remove waste. Cut products, regions or audiences that stay unprofitable after delivery.
Improve delivery. Raising your paid order rate lifts real ROAS without changing a single ad.
A simple weekly routine
Update your costs and paid order rate.
Recalculate your target platform ROAS.
Compare each campaign with the target, using at least a week of data.
Increase budget gradually on campaigns above target. Fix or stop those below it.
Check blended ROAS and total profit before you celebrate.
If you are at the start and do not yet know how much to spend, read our guide to your Meta Ads budget for an online store.
Launching a project this quarter?
30 minutes, no cost. We’ll show you where your cost per lead is leaking.
The answer in one line
A good ROAS is the one that leaves your store the profit you planned after product, shipping, ads and failed orders. If you want help building those numbers into your reporting, we can help you improve e-commerce ROAS using the money that actually reaches your account.
