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What is a good ROAS?

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, 2026

Short answer: A good ROAS is well above breakeven, and breakeven ROAS is 1 divided by your gross margin. With a 40% margin, breakeven is 2.5x. If your ad account reports revenue including 25% VAT, you need to multiply by 1.25, and breakeven becomes about 3.1x.
Calculator

Is your ROAS profitable?

40%
4.0x
Gross margin = what you have left after cost of goods, shipping and fees.
Green bar: your ROAS · white line: breakeven
Breakeven ROAS3.13x
POAS1.28
Per NOK 10,000 in ads+NOK 2,800

The formula

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

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 marginBreakeven, value excl. VATBreakeven, value incl. VAT4x ROAS incl. VAT is then
20%5.00x6.25xLoss
30%3.33x4.17xLoss
40%2.50x3.13xProfit
50%2.00x2.50xGood profit
70%1.43x1.79xGood 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.

Breakeven ROAS when the value in the account includes VAT
Bars above the dashed line mean 4x ROAS is a loss.
0x1x2x3x4x5x6x7x6.25x20%4.17x30%3.13x40%2.50x50%2.08x60%1.79x70%Your ROAS: 4x
4x is a loss4x is a profitx-axis: gross margin

Want to run your own numbers? Use the calculator at the top of the page.

VAT is the most common calculation mistake

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.

The order in your online store
Order valueNOK 1,250
VAT 25%−NOK 250
Your revenueNOK 1,000
→
4x ROAS in Google Ads is really
3.2x
because Google counts NOK 1,250

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.

Double counting and branded searches

From our accounts

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.

  • Double counting. Tracking can count the same purchase several times. Always check the number of purchases and revenue in Google Ads against your online store or your accounts.
  • Branded searches. People who search for your name would mostly have bought anyway. If they’re mixed in, the ads for new customers look better than they are. Put branded searches in a separate campaign and evaluate it on its own.
  • Several channels take credit for the same sale. Google and Meta both count the sale if the customer has been through both. The sum of ROAS across channels then ends up higher than reality. Also measure total revenue divided by total ad spend (often called MER). When we ran Leid.no, ROAS was 4.73x across channels.

POAS: when margins vary

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.

Campaign A
Margin20%
ROAS5.0x
POAS1.0
Breaks even
Campaign B
Margin60%
ROAS3.0x
POAS1.8
Makes money

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.

In summary

  1. Calculate your gross margin after cost of goods, shipping and fees.
  2. Breakeven ROAS = 1 / margin. Multiply by 1.25 if the value in the account includes VAT.
  3. Aim well above breakeven.
  4. If margins vary, steer on POAS or split your campaigns by margin.
  5. Check your ROAS against your online store or your accounts before you trust it.
Some of our clients
Utvendigrenhold Veldigrent.no Rask Flytting Mokki Badstugutta Frifor.app
Before / after

Before and after Arcads.

The numbers come from our clients’ own ad accounts.

Utvendig Renhold
Utvendig Renhold
BeforeOne national campaign, no breakdown by city
After9 regions with their own campaigns, 549 leads in 90 days (June–Sept 2026)
Mokki
Mokki
BeforeGoogle Ads barely in use
After+127% profit year over year, with ads in Norway, Germany and Denmark
Ad for Leid.no
Leid.no
BeforeTracking that counted far more purchases than actually happened
After4.73x ROAS across channels, over NOK 100,000 a month in ad spend

See also: Google Ads agency · Meta Ads agency · Performance marketing agency · What is UGC? · Google Ads agency Oslo

Questions and answers.

What is ROAS?+
ROAS (Return On Ad Spend) is conversion value divided by ad spend. A ROAS of 4x means NOK 4 in revenue for every krone spent on ads. That’s revenue, not profit.
What is a good ROAS?+
It depends on your gross margin. Breakeven ROAS is 1 divided by the margin: 3.33x at 30% margin, 2.5x at 40% and 2x at 50%. If the value in your ad account includes VAT, multiply by 1.25. A good ROAS is well above your own breakeven.
Do I need to account for VAT when I calculate ROAS?+
Yes, if your online store sends the order value including 25% VAT to Google Ads or Meta. Then breakeven is 1.25 times higher. With a 40% margin, breakeven becomes about 3.1x instead of 2.5x. Alternatively, you can send the value excluding VAT to your ad accounts.
What is POAS?+
POAS (Profit On Ad Spend) is gross profit divided by ad spend. Above 1 means the ads are making money. It’s a better target than ROAS when margins vary a lot between products.
Why does my ROAS look better than my bottom line?+
The most common reasons are that the value includes VAT, that tracking counts the same purchase several times, that branded searches are mixed in, or that several channels take credit for the same sale. Check the numbers against your online store or your accounts.
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