What Is a Good ROAS on Amazon?
Return on Ad Spend (ROAS) is one of the most referenced metrics in Amazon advertising, and one of the most misunderstood. Many sellers aim for a “good” ROAS without knowing whether that number supports profitability or long-term growth.
So, what is a good ROAS on Amazon?
For most sellers, a healthy ROAS typically falls between 3x and 5x, but the right target depends on your product margins, Amazon fees, and business goals. In practice, the most important number is not an industry benchmark at all, it’s your break-even ROAS.
In this guide, we’ll explain what ROAS means on Amazon, how to calculate it correctly, how it compares to ACoS, and how to determine the ROAS target that makes sense for your business.
Overview
- What Is ROAS?
- ROAS Formula
- Amazon PPC Example
- How to Calculate ROAS on Amazon
- Where to Find ROAS in Seller Central
- Common ROAS Calculation Mistakes
- What Is a Good ROAS on Amazon?
- Common ROAS Benchmarks
- The Missing Context: Profitability
- ROAS and ACoS: The Inverse Relationship
- ROAS vs ACoS: Which Metric Should You Focus On?
- Why Amazon Highlights ACoS
- What is Breakeven ROAS?
- How to Calculate Breakeven ROAS and Other Target Metrics
- When a Low ROAS Can Be a Smart Strategy
- How to Improve Your ROAS on Amazon
- What Other Metrics Should I Track Besides ROAS?
- FAQs
What Is ROAS?
ROAS (Return on Ad Spend) measures how much revenue you generate for every dollar spent on advertising. On Amazon, ROAS is primarily used to evaluate the efficiency of PPC campaigns and guide budget allocation decisions.
Simply put, ROAS answers the question:
“How much revenue am I generating for every dollar spent on ads?”
Amazon sellers commonly use ROAS to compare performance across campaigns, keywords, and ad types to understand which efforts are generating the strongest returns.
ROAS Formula
ROAS = Revenue ÷ Ad Spend
Amazon PPC Example
If you spend $100 on Amazon ads and generate $400 in ad-attributed sales:
ROAS = $400 ÷ $100 = 4.0x
This means you earned $4 in revenue for every $1 spent on advertising.
How to Calculate ROAS on Amazon
Calculating ROAS is straightforward, but making sure you calculate it correctly depends on using the right data and time frames.
Step-by-Step Calculation
- Identify ad-attributed revenue for a campaign, keyword, or product
- Identify total ad spend for the same date range
- Divide revenue by ad spend
ROAS = Ad-Attributed Sales ÷ Ad Spend
Where to Find ROAS in Seller Central
ROAS can be viewed in Amazon Seller Central under Advertising > Campaign Manager, or calculated using downloadable campaign reports. Amazon emphasizes ACoS more prominently, but ROAS is simply its inverse.
Common ROAS Calculation Mistakes
Even though ROAS is simple to calculate, it is often misinterpreted due to the following:
- Attribution errors: Using total sales instead of ad-attributed revenue inflates ROAS and misrepresents performance.
- Incomplete cost accounting: Excluding creative costs, tools, or campaign management fees can overstate true returns.
- Ignoring profitability and lifetime value: Focusing only on short-term revenue may undervalue campaigns that drive repeat customers.
- Lack of context: Seasonality, demand shifts, and market conditions can all impact ROAS independently of campaign quality.
What Is a Good ROAS on Amazon?
There is no single “good” ROAS that applies to every seller. However, many Amazon businesses operate within the following ranges.
Common ROAS Benchmarks
ROAS Range
What It Typically Indicates
2.0x
Near break-even or launch-stage campaigns
3.0x
Modestly profitable for many products
4-5x
Strong ROAS for many private-label sellers
6x+
Highly efficient, often branded or defensive ads
These benchmarks should be treated as guidelines, not rules. What matters most is whether ROAS aligns with your costs and goals.
Remember, a single ROAS benchmark does not apply to every Amazon business. A 3.0x ROAS can be a strong result for a high-margin supplement brand, while the same outcome may be unprofitable for a low-margin electronics reseller. The difference comes down to gross profit margin.
The Missing Context: Profitability
To decide whether a ROAS is actually “good,” sellers need to look past the multiplier and account for their real costs. This is where breakeven and target metrics matter.
Instead of asking, “Is my ROAS high enough?” the better questions are:
- What is my survival line? (Breakeven ROAS)
- What is my profit goal? (Target ROAS)
Answering these questions requires a clear understanding of how ad spend, revenue, and margins interact. This leads directly to the critical relationship between ROAS and ACoS, which determines whether advertising is supporting long-term profitability or quietly eroding it.
ROAS and ACoS: The Inverse Relationship
ROAS and ACoS measure the same performance relationship from opposite perspectives.
ROAS = Revenue ÷ Ad Spend
ACoS = Ad Spend ÷ Revenue (or 1 ÷ ROAS)
Examples
- 25% ACoS = 4.0x ROAS
- 33% ACoS = 3.0x ROAS
- 50% ACoS = 2.0x ROAS
Understanding this relationship helps sellers interpret ad performance more accurately and avoid focusing on cost or return in isolation.
ROAS vs ACoS: Which Metric Should You Focus On?
ROAS shows how much revenue is generated for every dollar spent on advertising.
ACoS shows how much is spent to generate one dollar in sales.
In simple terms:
- ROAS asks: “How much did I earn?” (Here, the focus on growth)
- ACoS asks: “How much did I spend?” (Whereas here, the focus on cost)
Using ROAS instead of ACoS shifts the mindset from cost control to return evaluation. In practice, experienced sellers monitor both, using ROAS for strategic decisions and ACoS for margin control.
Why Amazon Highlights ACoS
Amazon emphasizes ACoS because it frames advertising performance in a cost-based way that aligns closely with gross margin. This makes it easier for sellers to evaluate profitability without additional calculations.
When using ROAS, determining profitability often requires extra math.
For example, sellers may ask whether a 3.5x ROAS is profitable if margins are 30 percent. ACoS simplifies this evaluation by allowing for immediate comparison.
The logic is straightforward. If your gross margin is 30 percent and your ACoS is 25 percent, you can quickly see that 5 percent remains as profit. This direct alignment helps sellers assess whether advertising is affordable relative to product margins.
Alongside Amazon’s fees, small percentage changes can materially impact profitability, so ACoS functions as a clear and practical indicator of advertising sustainability.
What is Breakeven ROAS?
Breakeven ROAS is the minimum ROAS required to cover all costs without losing money. Any ROAS above this number is profitable; anything below it results in a loss.
How to Calculate Breakeven ROAS and Other Target Metrics
To set effective goals, sellers need to move beyond industry averages and define their own clear thresholds. This process starts with understanding gross margin.
1. Calculate Your Gross Margin
Before setting ROAS or ACoS targets, it is essential to know how much profit remains from each sale before advertising.
Formula: (Selling Price – COGS – Amazon Fees) ÷ Selling Price = Gross Margin %
Example
- Selling price: $50
- Product cost + fees: $35
- Gross margin = ($50 – $35) ÷ 50 = 30%
2. Find Your Break-even Point
The break-even point is where advertising neither generates profit nor creates a loss. This represents the minimum acceptable performance level and should not be sustained long term.
Break-even ACoS is equal to your gross margin.
If your margin is 35 percent, your break-even ACoS is 35 percent.
Break-even ROAS is the inverse of your margin.
Formula: 1 ÷ Gross Margin
Example: 1 ÷ 0.35 = 2.85x ROAS
3. Determine Your Target ACoS and ROAS
Profitability requires more than breaking even. Target metrics should reflect the net profit you expect to earn after advertising.
Target ACoS is calculated by subtracting your desired profit from your gross margin.
Formula: Gross Margin – Desired Profit % = Target ACoS
Example: If your goal is a 15 percent net profit on a product with a 35 percent margin, your target ACoS is 20 percent.
Target ROAS converts that target ACoS into a multiplier.
Formula: 1 ÷ Target ACoS
Example: 1 ÷ 0.20 = 5.0x Target ROAS
In practice, sellers who understand the relationship between gross margin, break-even thresholds, and target metrics make stronger scaling decisions than those who rely solely on generic industry benchmarks.
When a Low ROAS Can Be a Smart Strategy
A low ROAS is not always a bad sign. In some cases, focusing only on ROAS can be misleading because it does not account for customer volume or long-term value.
In many Amazon ad accounts, a 1.5x-2x ROAS campaign that acquires 100 customers can be far more valuable than a 10x ROAS campaign that generates only a handful of sales. While the higher ROAS looks better on paper, the lower ROAS campaign creates significantly more long-term opportunity.
This is especially true for top-of-funnel campaigns, where the goal is customer acquisition rather than immediate profit. Brands with strong remarketing, email follow-up, or repeat purchase behavior often recover profitability later.
Margin profiles also matter. High-margin products can afford lower ROAS, while low-margin products must be more conservative. A very high ROAS can sometimes indicate under-spending, meaning potential customers and future revenue are being left on the table.
How to Improve Your ROAS on Amazon
ROAS improves when advertising becomes more efficient, not simply when ad spend is reduced. In practice, the biggest gains usually come from tightening targeting and improving conversion rates.
Key Areas to Focus On
- Use the right ad types: Sponsored Products typically deliver the strongest ROAS due to high purchase intent, while Sponsored Brands and Sponsored Display may trade efficiency for visibility depending on campaign goals.
- Optimize bids and budgets intentionally: Reduce spend on low-converting keywords and prioritize campaigns that consistently generate sales.
- Improve targeting and relevance: Tightly matched keywords and relevant targeting reduce wasted clicks and improve ROAS.
- Continuously mine search terms: Scale converting search terms and add non-converting terms as negatives.
- Improve conversion rate: Better listings, pricing, images, and reviews often improve ROAS more than bid changes alone.
What Other Metrics Should I Track Besides ROAS?
ROAS shows how much revenue you earn from ads, but it does not explain why performance changes. To get a complete picture, sellers should also monitor:
- ACoS: Short-term cost efficiency
- TACoS: Long-term growth and organic lift
- Conversion rate (CVR): Listing effectiveness
- Cost per click (CPC): Traffic efficiency
- Click-through rate (CTR): Targeting relevance
- Organic sales lift: Long-term impact
- Profit per SKU: Real profitability
Together, these metrics provide a clearer, more reliable view of advertising performance.
Conclusion
There is no single “good” ROAS for every Amazon seller. The right ROAS depends on margins, fees, and business goals. The most reliable benchmark is your break-even ROAS, supported by conversion rate, CPC, and long-term performance metrics.
When evaluated correctly, ROAS becomes a practical tool for profitable scaling, not just a vanity number.
FAQs
What is a good ROAS for new Amazon sellers?
New sellers often operate at lower ROAS while building visibility and collecting data.
Is a 2x ROAS bad on Amazon?
Not necessarily. It may be acceptable depending on margins and break-even ROAS.
How often should I evaluate ROAS?
Weekly for optimization, monthly for strategic planning.
Can ROAS be too high?
Yes. Extremely high ROAS can indicate under-investment and missed growth.
Should I pause ads with low ROAS?
Not automatically. Evaluate intent, funnel position, and long-term impact first.
Return on Ad Spend (ROAS) is one of the most referenced metrics in Amazon advertising, and one of the most misunderstood. Many sellers aim for a “good” ROAS without knowing whether that number supports profitability or long-term growth.
So, what is a good ROAS on Amazon?
For most sellers, a healthy ROAS typically falls between 3x and 5x, but the right target depends on your product margins, Amazon fees, and business goals. In practice, the most important number is not an industry benchmark at all, it’s your break-even ROAS.
In this guide, we’ll explain what ROAS means on Amazon, how to calculate it correctly, how it compares to ACoS, and how to determine the ROAS target that makes sense for your business.
- What Is ROAS?
- ROAS Formula
- Amazon PPC Example
- How to Calculate ROAS on Amazon
- Where to Find ROAS in Seller Central
- Common ROAS Calculation Mistakes
- What Is a Good ROAS on Amazon?
- Common ROAS Benchmarks
- The Missing Context: Profitability
- ROAS and ACoS: The Inverse Relationship
- ROAS vs ACoS: Which Metric Should You Focus On?
- Why Amazon Highlights ACoS
- What is Breakeven ROAS?
- How to Calculate Breakeven ROAS and Other Target Metrics
- When a Low ROAS Can Be a Smart Strategy
- How to Improve Your ROAS on Amazon
- What Other Metrics Should I Track Besides ROAS?
- FAQs
ROAS (Return on Ad Spend) measures how much revenue you generate for every dollar spent on advertising. On Amazon, ROAS is primarily used to evaluate the efficiency of PPC campaigns and guide budget allocation decisions.
Simply put, ROAS answers the question:
“How much revenue am I generating for every dollar spent on ads?”
Amazon sellers commonly use ROAS to compare performance across campaigns, keywords, and ad types to understand which efforts are generating the strongest returns.
ROAS Formula
ROAS = Revenue ÷ Ad Spend
If you spend $100 on Amazon ads and generate $400 in ad-attributed sales:
ROAS = $400 ÷ $100 = 4.0x
This means you earned $4 in revenue for every $1 spent on advertising.
How to Calculate ROAS on Amazon
Calculating ROAS is straightforward, but making sure you calculate it correctly depends on using the right data and time frames.
Step-by-Step Calculation
- Identify ad-attributed revenue for a campaign, keyword, or product
- Identify total ad spend for the same date range
- Divide revenue by ad spend
ROAS = Ad-Attributed Sales ÷ Ad Spend
Where to Find ROAS in Seller Central
ROAS can be viewed in Amazon Seller Central under Advertising > Campaign Manager, or calculated using downloadable campaign reports. Amazon emphasizes ACoS more prominently, but ROAS is simply its inverse.
Common ROAS Calculation Mistakes
Even though ROAS is simple to calculate, it is often misinterpreted due to the following:
- Attribution errors: Using total sales instead of ad-attributed revenue inflates ROAS and misrepresents performance.
- Incomplete cost accounting: Excluding creative costs, tools, or campaign management fees can overstate true returns.
- Ignoring profitability and lifetime value: Focusing only on short-term revenue may undervalue campaigns that drive repeat customers.
- Lack of context: Seasonality, demand shifts, and market conditions can all impact ROAS independently of campaign quality.
What Is a Good ROAS on Amazon?
There is no single “good” ROAS that applies to every seller. However, many Amazon businesses operate within the following ranges.
Common ROAS Benchmarks
| ROAS Range | What It Typically Indicates |
|---|---|
| 2.0x | Near break-even or launch-stage campaigns |
| 3.0x | Modestly profitable for many products |
| 4-5x | Strong ROAS for many private-label sellers |
| 6x+ | Highly efficient, often branded or defensive ads |
These benchmarks should be treated as guidelines, not rules. What matters most is whether ROAS aligns with your costs and goals.
Remember, a single ROAS benchmark does not apply to every Amazon business. A 3.0x ROAS can be a strong result for a high-margin supplement brand, while the same outcome may be unprofitable for a low-margin electronics reseller. The difference comes down to gross profit margin.
The Missing Context: Profitability
To decide whether a ROAS is actually “good,” sellers need to look past the multiplier and account for their real costs. This is where breakeven and target metrics matter.
Instead of asking, “Is my ROAS high enough?” the better questions are:
- What is my survival line? (Breakeven ROAS)
- What is my profit goal? (Target ROAS)
Answering these questions requires a clear understanding of how ad spend, revenue, and margins interact. This leads directly to the critical relationship between ROAS and ACoS, which determines whether advertising is supporting long-term profitability or quietly eroding it.
ROAS and ACoS: The Inverse Relationship
ROAS and ACoS measure the same performance relationship from opposite perspectives.
ROAS = Revenue ÷ Ad Spend
ACoS = Ad Spend ÷ Revenue (or 1 ÷ ROAS)
Examples
- 25% ACoS = 4.0x ROAS
- 33% ACoS = 3.0x ROAS
- 50% ACoS = 2.0x ROAS
Understanding this relationship helps sellers interpret ad performance more accurately and avoid focusing on cost or return in isolation.
ROAS vs ACoS: Which Metric Should You Focus On?
ROAS shows how much revenue is generated for every dollar spent on advertising.
ACoS shows how much is spent to generate one dollar in sales.
In simple terms:
- ROAS asks: “How much did I earn?” (Here, the focus on growth)
- ACoS asks: “How much did I spend?” (Whereas here, the focus on cost)
Using ROAS instead of ACoS shifts the mindset from cost control to return evaluation. In practice, experienced sellers monitor both, using ROAS for strategic decisions and ACoS for margin control.
Why Amazon Highlights ACoS
Amazon emphasizes ACoS because it frames advertising performance in a cost-based way that aligns closely with gross margin. This makes it easier for sellers to evaluate profitability without additional calculations.
When using ROAS, determining profitability often requires extra math.
For example, sellers may ask whether a 3.5x ROAS is profitable if margins are 30 percent. ACoS simplifies this evaluation by allowing for immediate comparison.
The logic is straightforward. If your gross margin is 30 percent and your ACoS is 25 percent, you can quickly see that 5 percent remains as profit. This direct alignment helps sellers assess whether advertising is affordable relative to product margins.
Alongside Amazon’s fees, small percentage changes can materially impact profitability, so ACoS functions as a clear and practical indicator of advertising sustainability.
What is Breakeven ROAS?
Breakeven ROAS is the minimum ROAS required to cover all costs without losing money. Any ROAS above this number is profitable; anything below it results in a loss.
How to Calculate Breakeven ROAS and Other Target Metrics
To set effective goals, sellers need to move beyond industry averages and define their own clear thresholds. This process starts with understanding gross margin.
1. Calculate Your Gross Margin
Before setting ROAS or ACoS targets, it is essential to know how much profit remains from each sale before advertising.
Formula: (Selling Price – COGS – Amazon Fees) ÷ Selling Price = Gross Margin %
Example
- Selling price: $50
- Product cost + fees: $35
- Gross margin = ($50 – $35) ÷ 50 = 30%
2. Find Your Break-even Point
The break-even point is where advertising neither generates profit nor creates a loss. This represents the minimum acceptable performance level and should not be sustained long term.
Break-even ACoS is equal to your gross margin.
If your margin is 35 percent, your break-even ACoS is 35 percent.
Break-even ROAS is the inverse of your margin.
Formula: 1 ÷ Gross Margin
Example: 1 ÷ 0.35 = 2.85x ROAS
3. Determine Your Target ACoS and ROAS
Profitability requires more than breaking even. Target metrics should reflect the net profit you expect to earn after advertising.
Target ACoS is calculated by subtracting your desired profit from your gross margin.
Formula: Gross Margin – Desired Profit % = Target ACoS
Example: If your goal is a 15 percent net profit on a product with a 35 percent margin, your target ACoS is 20 percent.
Target ROAS converts that target ACoS into a multiplier.
Formula: 1 ÷ Target ACoS
Example: 1 ÷ 0.20 = 5.0x Target ROAS
In practice, sellers who understand the relationship between gross margin, break-even thresholds, and target metrics make stronger scaling decisions than those who rely solely on generic industry benchmarks.
When a Low ROAS Can Be a Smart Strategy
A low ROAS is not always a bad sign. In some cases, focusing only on ROAS can be misleading because it does not account for customer volume or long-term value.
In many Amazon ad accounts, a 1.5x-2x ROAS campaign that acquires 100 customers can be far more valuable than a 10x ROAS campaign that generates only a handful of sales. While the higher ROAS looks better on paper, the lower ROAS campaign creates significantly more long-term opportunity.
This is especially true for top-of-funnel campaigns, where the goal is customer acquisition rather than immediate profit. Brands with strong remarketing, email follow-up, or repeat purchase behavior often recover profitability later.
Margin profiles also matter. High-margin products can afford lower ROAS, while low-margin products must be more conservative. A very high ROAS can sometimes indicate under-spending, meaning potential customers and future revenue are being left on the table.
How to Improve Your ROAS on Amazon
ROAS improves when advertising becomes more efficient, not simply when ad spend is reduced. In practice, the biggest gains usually come from tightening targeting and improving conversion rates.
Key Areas to Focus On
- Use the right ad types: Sponsored Products typically deliver the strongest ROAS due to high purchase intent, while Sponsored Brands and Sponsored Display may trade efficiency for visibility depending on campaign goals.
- Optimize bids and budgets intentionally: Reduce spend on low-converting keywords and prioritize campaigns that consistently generate sales.
- Improve targeting and relevance: Tightly matched keywords and relevant targeting reduce wasted clicks and improve ROAS.
- Continuously mine search terms: Scale converting search terms and add non-converting terms as negatives.
- Improve conversion rate: Better listings, pricing, images, and reviews often improve ROAS more than bid changes alone.
What Other Metrics Should I Track Besides ROAS?
ROAS shows how much revenue you earn from ads, but it does not explain why performance changes. To get a complete picture, sellers should also monitor:
- ACoS: Short-term cost efficiency
- TACoS: Long-term growth and organic lift
- Conversion rate (CVR): Listing effectiveness
- Cost per click (CPC): Traffic efficiency
- Click-through rate (CTR): Targeting relevance
- Organic sales lift: Long-term impact
- Profit per SKU: Real profitability
Together, these metrics provide a clearer, more reliable view of advertising performance.
Conclusion
There is no single “good” ROAS for every Amazon seller. The right ROAS depends on margins, fees, and business goals. The most reliable benchmark is your break-even ROAS, supported by conversion rate, CPC, and long-term performance metrics.
When evaluated correctly, ROAS becomes a practical tool for profitable scaling, not just a vanity number.
FAQs
What is a good ROAS for new Amazon sellers?
New sellers often operate at lower ROAS while building visibility and collecting data.
Is a 2x ROAS bad on Amazon?
Not necessarily. It may be acceptable depending on margins and break-even ROAS.
How often should I evaluate ROAS?
Weekly for optimization, monthly for strategic planning.
Can ROAS be too high?
Yes. Extremely high ROAS can indicate under-investment and missed growth.
Should I pause ads with low ROAS?
Not automatically. Evaluate intent, funnel position, and long-term impact first.
