People online will tell you 3X is a good ROAS. Some say 4X. I don't use either number, because neither of them knows what your product costs you.
ROAS is your revenue divided by your ad spend. Spend ₹10,000, make ₹30,000 in sales, and your ROAS is 3X.
Now take two made-up stores. Both spent ₹10,000 and both made ₹30,000. Same 3X.
Store A keeps 60% of every sale after product cost, packaging and delivery. So it keeps ₹18,000, pays ₹10,000 for ads, and has ₹8,000 left.
Store B keeps 25%. It keeps ₹7,500, pays the same ₹10,000 for ads, and loses ₹2,500.
Same ROAS. One made money and the other paid to stay busy.
Your break-even number
Divide 1 by your margin.
If you keep 60% of each sale, that's 1 ÷ 0.60, so you break even at about 1.67X. If you keep 25%, you need 4X just to get your ad money back. Anything above that number is profit. Anything below it, you're paying customers to shop with you.
A good ROAS is any number comfortably above your break-even. For Store A, 3X is great. For Store B, 3X is a slow leak.
Most people calculate margin too kindly
Product cost is the easy part. Add packaging, shipping, payment gateway fees and whatever discount you usually give.
If you sell in India and offer cash on delivery, count your returned orders too. When a COD parcel comes back, you've paid for the ad, you've paid for delivery, and you've made nothing. So work out your ROAS on delivered orders. Orders placed will flatter you.
And check the number in Ads Manager against your own store. Meta reports the sales it thinks it caused. Your bank account reports what actually arrived. When those two disagree, trust the bank.
What to do when you're below break-even
The obvious move is to change the ad or raise the budget. I'd look at the store first.
Can a stranger find the price and size quickly? How many steps sit between the ad and the payment? If people are clicking and not buying, a new ad just sends more people into the same problem.
Find the biggest drop. Fix that one thing. Measure it. Then change the next thing.
One eyewear retailer I work with grew revenue 18% without adding a single rupee of ad spend, so more budget is far from the only way up.
If you want me to look at yours, book a free 15-minute audit call. You'll leave knowing your break-even number and your top 3 fixes, even if we never work together.