A good ROAS is any number that clears your break even ROAS with room left for overhead and profit. Break even ROAS is 1 divided by your gross margin, so a 50% margin breaks even at 2x and a 25% margin breaks even at 4x. There is no universal good number. The 4x you see quoted everywhere is only right if your margin happens to be around 25%.
Owners ask this constantly, and the honest answer annoys people because it is not a number. A store with a 70% margin and a store with a 15% margin can both be running a 3x ROAS. One of them is printing money and the other is quietly losing it.
What does ROAS actually measure?
ROAS is return on ad spend: the revenue (conversion value) your ads get you for each dollar you spend on them. Google's help docs describe a target ROAS as "the average conversion value (for example, revenue) you'd like to get for each dollar you spend on ads," and give the example of $5 in sales for every $1 in ad spend, which Google writes as 500%.
That unit difference trips people up. A 5x ROAS in Meta and a 500% target ROAS in Google Ads are the same thing. Check which one the platform is asking for before you type anything in.
Why is 4x the wrong answer?
Because ROAS ignores what your product costs you. It counts revenue, not profit. The same ROAS means very different things at different margins, and here is the math:
| Gross margin | Break even ROAS |
|---|---|
| 70% | 1.43x |
| 50% | 2.00x |
| 40% | 2.50x |
| 30% | 3.33x |
| 25% | 4.00x |
| 15% | 6.67x |
It is just 1 divided by your margin. Nothing mysterious. At a 15% margin, a 4x ROAS loses you money on every sale. At a 70% margin, a 2x ROAS is a healthy account. The "4x is good" rule of thumb gets repeated a lot, but it has nothing to do with your costs. Treat it as a coin flip, not a standard.
Is break even ROAS the goal?
No. Break even only means the ads paid for themselves. You also have to cover overhead and want something left over. So decide how much profit you want after ad spend, and subtract it from your margin before you divide.
The target ROAS formula we use
Target ROAS = 1 ÷ (gross margin minus the profit you want to keep). Example: a 50% margin and 15% of revenue you want left after ads gives 1 ÷ (0.50 minus 0.15) = 2.86x. Spend $35 on ads for every $100 of revenue and you keep $15.
Use your real margin here, not the one on the supplier invoice. Take out shipping, payment processing fees, and returns if they are material. This is our working method, not a platform rule, and it is the single most useful ten minutes you can spend before touching a budget.
What about lead gen and home service businesses?
ROAS only works if the platform sees real job values, and most contractor accounts don't pass them back. If you are a roofer, HVAC company, or restoration business, our recommendation is to skip ROAS and work from cost per booked job instead. The break even version is simple: your close rate times your gross profit per job.
Example math, not a benchmark: if you close 1 in 4 leads and make $800 gross profit per job, a lead is worth $200 to you. Pay more than $200 per lead and you are underwater, no matter what the dashboard says. Our Google Ads for contractors guide goes deeper on lead cost.
How do you set a target ROAS in Google Ads?
Start from what the account does today, not what you wish it did. Google's guidance is to set the target from your business goals and your historical ROAS, and it warns that a target set too high can limit how much traffic your ads get. It also says to look at four weeks or one to two conversion cycles, whichever is longer, and to leave out the most recent conversion delay period so the latest days don't drag the number down.
Google lists a floor too: for Search and Shopping, at least 15 conversions in the past 30 days at the conversion tracking level before target ROAS bidding makes sense. If you are below that, a target is a guess.
Our take: set the target at or slightly above your real four week ROAS, then nudge it up in small steps. Jumping straight to the number you want is how accounts choke their own traffic. If your ROAS is already sliding, read why your ROAS is dropping before you change a target.
What did a good ROAS look like on a real account?
On the NUDE Envie account, we took over near break even at 1.07x ROAS in February 2026. By July it was at 1.87x and cost per order had dropped from $82 to $32. That is still a lot lower than 4x, and it was a real improvement, because the goal was to move the account steadily above its own break even line, not to hit somebody else's benchmark. If you want a second set of eyes on your numbers, see our Google Ads management and Meta Ads pages.
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What is a good ROAS?
One that is above your break even ROAS with room for overhead and profit. Break even is 1 divided by your gross margin, so there is no single good number. A 50% margin breaks even at 2x. A 25% margin needs 4x.
Is a 4x ROAS good?
Only if your margin supports it. At a 25% margin, 4x is exactly break even. At a 50% margin, 4x is strong. The rule of thumb ignores your costs, so calculate your own.
What is the difference between ROAS and ROI?
ROAS divides revenue by ad spend and ignores product cost. ROI looks at profit against total cost. A campaign can have a healthy ROAS and a negative return if the margin is thin.
How do I turn ROAS into a Google Ads target?
Google expresses target ROAS as a percentage. Multiply your ROAS by 100, so a 3x ROAS is a 300% target. Base it on four weeks or one to two conversion cycles of past performance, excluding the latest conversion delay period.
Sources
- Google Ads Help, About Target ROAS bidding (ROAS definition, the $5 to $1 example, setting a target from historical ROAS, the 4 week or 1 to 2 conversion cycle window, conversion delay, and the 15 conversions in 30 days minimum for Search and Shopping)
- Slice of the Pie, NUDE Envie case study (platform reported data, February to July 2026)
- The break even and target ROAS formulas are arithmetic, and the home service example uses illustrative numbers, not benchmarks.