What ROAS means
ROAS — return on ad spend — is revenue divided by the ad spend that produced it. Spend ₹1,00,000 and generate ₹4,00,000 in tracked revenue and your ROAS is 4, often written 4× or 400%.
It's a top-line efficiency number. It tells you how much revenue each rupee of ad spend returns, but on its own it says nothing about profit.
Why 'a good ROAS' is the wrong question
A 4× ROAS is fantastic for a business with thin margins and a disaster for one with a 20% gross margin — because at a 20% margin you need to make back five rupees of revenue just to cover one rupee of product cost before you've paid for the ad at all.
The right question is: what's my break-even ROAS? That's the ROAS at which you're neither making nor losing money on the campaign, and it's set by your gross margin, not by an industry benchmark.
How to find your break-even ROAS
Break-even ROAS is simply 1 divided by your gross margin. A 40% gross margin means a break-even ROAS of 1 ÷ 0.40 = 2.5×. Anything above 2.5× is profit on the ad; anything below is a loss, no matter how good it looks next to someone else's benchmark.
Once you know break-even, you can also work out the most you can profitably pay per customer (your max CPA) and per click (max CPC) — the real guardrails for scaling.
Watch out for tracking and attribution
Reported ROAS depends entirely on which conversions the platform sees and how it attributes them. iOS privacy changes, blocked pixels, and generous attribution windows can inflate platform-reported ROAS well above what actually hit your bank account.
Sanity-check platform ROAS against your real revenue (from your store or CRM) periodically. If the two disagree badly, fix tracking before you trust the number to make budget decisions.