4x ROAS is a common target, but the number says nothing about whether you’re making money. That depends on your margin, whether the value in your ad account includes VAT or not, and whether purchases are counted correctly.
By Victor Skretteberg, Arcads · Updated September 28, 20263 min read
ROAS = revenue ÷ ad spend
ROAS = conversion value / ad spend. If you get NOK 40,000 in sales from NOK 10,000 in ads, you have 4x ROAS. The problem is that ROAS measures revenue, and what you live on is what’s left after cost of goods, shipping and fees.
Breakeven ROAS = 1 / gross margin. That’s the ROAS at which the ads exactly break even. If the value in your ad account includes 25% VAT, breakeven is 1.25 times higher.
| Gross margin | Breakeven, value excl. VAT | Breakeven, value incl. VAT | 4x ROAS incl. VAT is then |
|---|---|---|---|
| 20% | 5.00x | 6.25x | Loss |
| 30% | 3.33x | 4.17x | Loss |
| 40% | 2.50x | 3.13x | Profit |
| 50% | 2.00x | 2.50x | Good profit |
| 70% | 1.43x | 1.79x | Good profit |
Look at the 30% row. Without VAT, 4x looks like a small profit. With VAT in the value, it’s a loss. Use your margin after cost of goods, shipping, payment fees and returns, not just the purchase price, and aim well above breakeven, because the numbers fluctuate from week to week.
Want to run your own numbers? Use the calculator at the top of the page.
Many online stores send the order value including VAT to Google Ads and Meta. An order of NOK 1,250 is then NOK 1,000 in revenue for you, and a reported ROAS of 4x is really 3.2x.
You have two options: send the value excluding VAT (and ideally excluding shipping) to your ad accounts, or multiply breakeven by 1.25. Check what’s being sent by placing a test order and comparing the value in Google Ads with the order in your online store.
Want to see what we would do for you? Send us your website and get a free proposal for ads and a landing page.
Get the proposal →When we started with Leid.no, tracking counted far more purchases than actually happened. In another online store we manage, two conversion actions counted the same purchase. The ROAS in Google looked twice as good as it really was.
POAS (Profit On Ad Spend) = gross profit / ad spend. Above 1 means the ads are making money. It’s a better target when margins vary a lot between products.
A hypothetical example: an online store has one campaign with products at 20% margin and 5x ROAS, and one with products at 60% margin and 3x ROAS. The first has a POAS of 1.0 and breaks even. The second has a POAS of 1.8 and makes money, even though its ROAS is lower. If you steer on ROAS alone, you move budget in the wrong direction.
To steer on POAS, the ad account needs to receive gross profit as the conversion value instead of revenue, for example through a custom setup in your online store. The alternative is to split products into campaigns by margin, with different ROAS targets. That’s described in the article on Google Shopping.
The numbers come from our clients' own ad accounts.
profit year over year
Google Ads in Norway, Germany and DenmarkRead the case
ROAS
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ROAS
Meta ads, September 2026Read the case
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