What is a good ROAS?


#1

Hi

I was wondering if 2.5 is a good ROAS?

Product Selling Price including shipping: 20.95
Product in the mail cost: $12.25
ROAS 2.5

Thank you


#2

Hi,

I’m not an expert in marketing and it was a long time ago I did any, but I think there are more to consider than sale and shipping before you can find what Return On Ad Spending you need for your business.

2.5 sounds slim because it seems you didn’t count other costs per sale, like production costs etc. Here is an article you might find useful to build your own opinion of what is a good ROAS for your business:


#3

Thank you

Very nice resource.


#5

Not bad, But can be improved.


#6

That’s not a helpful response as it stands, @davidlee21071996. How can it be improved? Please offer something of substance in your replies.


#7

Is the the correct way to calculate it?

20.95 - 12.25 = 8.70 profit
8.70 / 20.95 = .415 margin
.415 x 100 = 42% margin

Lets say advertising cost/spend is $42.

42 x 2.5 (ROAS) = 105 revenue
105 x 42% = 44.1

So I would make
44.1 - 42 = 2.1 profit?


#8

According to industry standard 3 is considered good. That means you are generating 3 dollars for every 1 dollar you spend. I usually advertise on google ads and if your ROAS is less. I remarket the audience on fb at a much cheaper cost.


#9

Yeah 2.5 seems borderline to me.


#10

Hi,
Which platforms are you using for advertisement?


#11

I advertise on Google, Penterest, Facebook mostly.


#12

Whats your industry ?
ROAS varies with the industry too


#14

Thanks for the article
it was very useful