Is a 4x ROAS good?

What ROAS leaves out

Every order carries costs the ad platform never sees. A discount code takes a cut off the top. Payment and platform fees take another. Then the product itself, pick and pack, packaging, the part of shipping you pay, and the cost of returns and refunds.

What is left is contribution: the money the order actually adds to the business. A campaign is only good if contribution covers the ad spend and leaves something behind.

Two campaigns, same spend

Here is an example. Campaign A spends $100,000 and the platform credits it with $400,000 in revenue: 4x. But its buyers used a heavy discount, chose products that cost a lot to make and ship, and returned more than usual. Very little was left.

Campaign B spends the same and books $290,000: 2.9x. Its buyers chose high-margin products, rarely sent them back and bought again within weeks. On the dashboard A wins. In the bank B does.

Work out your own break-even

Take your contribution margin before ad spend, as a share of revenue. If an order leaves 40% after every cost, you need a ROAS of 2.5x just to break even on the first order. If it leaves 25%, you need 4x. Your number comes from your own books, and it differs by product.

What to watch instead

Report contribution beside ROAS for every campaign. Then follow the customers each campaign brought in: did they come back, and what were they worth after 90 days? A campaign with a lower ROAS that brings buyers who reorder can be the best money you spend. A high ROAS on discounted, returned orders can be the worst.

Keep ROAS as a quick signal for creative and bidding. Decide budgets on contribution.