Numbers · 4 min
What is ROAS, and what number means you stop losing money?
Short answer
ROAS = sales from ads ÷ ad spend. Your break-even ROAS = 1 ÷ your margin. With a 40% margin you need a ROAS of 2.5 just to break even; anything above that is profit.
ROAS in one line
ROAS stands for Return On Ad Spend: how much revenue came back for every unit of money you put into ads.
Why a high ROAS can still lose money
Sales aren't profit. Every order has to cover the product, shipping, payment fees and packaging. What's left is your margin, and the ads are paid from that.
Your margin is 20%. You spend KWD 100 and make KWD 400 in sales (ROAS 4).
Profit before ads: 400 × 20% = KWD 80. After ads: 80 − 100 = a KWD 20 loss.
Work out your break-even ROAS
- Take your average selling price.
- Subtract product cost, shipping, payment fees and packaging.
- What's left ÷ the selling price = your margin.
- 1 ÷ margin = your break-even ROAS.
Try it for your store
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Your maximum cost per order
Same idea, other angle: AOV × margin. With a KWD 25 average order and a 40% margin, the most you can pay for one order is KWD 10. Every order that costs less is profit.
The platform's ROAS isn't always yours
Meta, Snapchat and TikTok each credit orders to themselves, and one order can be claimed by more than one of them. So we always come back to one plain number:
total store sales ÷ total ad spend, across every platform. That one doesn't lie.
How we work with it
Every report we send is one page: what we spent, what came back, what we learned, and what's next. Spend never changes without your approval.
Quick questions
What's the difference between ROAS and ROI?
ROAS compares sales with ad spend only. ROI looks at profit after every cost. A high ROAS can still mean a negative ROI if your margin is thin.
Is a ROAS of 3 good?
It depends on your margin. Above roughly 33%, a ROAS of 3 is profitable. Below it, 3 loses money.
Why doesn't the platform's ROAS match my store's sales?
Each platform credits orders to itself, and the same order can be claimed by more than one. Always check total store sales ÷ total ad spend.