What Is ROAS and How to Calculate It for Your Shopify Store

Return on Ad Spend (ROAS) is the single most important metric for any e-commerce merchant running paid advertising. In simple terms, ROAS measures how much revenue you earn for every dollar spent on ads. If you spend $100 on Facebook Ads and generate $500 in revenue, your ROAS is 5:1 — or 5x.

The formula is straightforward:

ROAS = Revenue from Ads ÷ Cost of Ads

Unlike ROI (Return on Investment), which factors in all business costs like product costs, shipping, and overhead, ROAS focuses exclusively on the relationship between ad spend and ad-driven revenue. This makes it the fastest way to evaluate whether a specific campaign, ad set, or platform is pulling its weight.

For Shopify store owners, ROAS is especially critical because paid acquisition often represents the largest variable cost in the business. A store with a 2x ROAS and 50% gross margins is actually breaking even on every ad dollar — meaning no profit is generated from paid traffic until ROAS exceeds that break-even point.

Shopify powers over 4.6 million active stores worldwide, and the vast majority rely on paid advertising to drive traffic. According to a 2025 Shopify merchant survey, the average store allocates 20–30% of its revenue back into advertising. When that spend isn't tracked properly, profits vanish quickly.

Here's why ROAS should be your north star metric:

• Budget allocation: ROAS tells you which platforms and campaigns deserve more budget and which ones to cut. A Google Shopping campaign with 6x ROAS clearly outperforms a TikTok campaign at 1.5x.
• Profitability clarity: Revenue alone is misleading. A campaign generating $10,000 in sales sounds great — until you realize you spent $8,000 on ads with only 30% margins on the product.
• Scaling decisions: When you know your break-even ROAS (typically 2x–3x for most e-commerce), you can confidently scale campaigns that exceed it and pause those that don't.
• Platform comparison: Running ads on Google, Facebook, Instagram, and TikTok simultaneously? ROAS lets you compare apples to apples across platforms.

According to data from WordStream, the average ROAS across all e-commerce verticals sits around 2.87x, though top-performing stores regularly achieve 4x–8x on their best campaigns.

Calculating ROAS for a Shopify store requires connecting your revenue data with your ad spend data. Here's a step-by-step approach:

Step 1: Track Ad-Attributed Revenue

Each ad platform reports conversions differently. Facebook uses a default 7-day click / 1-day view attribution window, while Google Ads uses 30-day click attribution. This means the same sale might be claimed by both platforms. For accurate ROAS, you need a single source of truth — your Shopify orders — matched against your ad spend.

Step 2: Pull Your Ad Spend

Log into each ad platform and pull your total spend for the period you're evaluating. For monthly ROAS, pull the full month's spend. Make sure to include all campaigns — even branded search campaigns, which often inflate overall ROAS numbers.

Step 3: Calculate

If your Shopify store generated $25,000 in ad-attributed revenue last month and you spent $5,000 across all platforms:

$25,000 ÷ $5,000 = 5.0x ROAS

Step 4: Calculate Break-Even ROAS

Your break-even ROAS depends on your profit margins. The formula is: Break-Even ROAS = 1 ÷ Profit Margin. If your average profit margin (after COGS, shipping, and transaction fees) is 40%, your break-even ROAS is 1 ÷ 0.40 = 2.5x. Anything above 2.5x is profitable; anything below means you're losing money on every ad-driven sale.

Even experienced merchants fall into these traps when tracking ROAS:

• Trusting platform-reported ROAS blindly: Facebook and Google both have incentives to make their numbers look good. They use different attribution models, and both will claim credit for the same conversion. Always verify against your actual Shopify revenue.
• Ignoring branded search: Branded Google Ads campaigns (people searching your store name) typically show 10x–20x ROAS, but those customers were already coming to you. Including branded search inflates your blended ROAS and hides underperforming prospecting campaigns.
• Not accounting for returns: A campaign might show 5x ROAS, but if 25% of those orders are returned, your real ROAS is closer to 3.75x. Always use net revenue (after returns and refunds) in your calculations.
• Measuring too short a window: Some products, especially higher-priced items, have longer consideration periods. A 7-day attribution window might miss conversions that happen 14 or 21 days after the initial ad click.

The best approach is to use a unified analytics platform that pulls data from all your ad accounts and matches it against your actual Shopify orders — giving you one accurate, de-duplicated ROAS number across all channels.

There's no universal "good" ROAS — it depends entirely on your margins, business model, and growth stage. However, here are general benchmarks based on industry data:

• Below 2x: You're likely losing money unless your margins are exceptionally high (60%+) or you're intentionally acquiring customers at a loss for lifetime value.
• 2x – 3x: Break-even territory for most e-commerce stores. Sustainable but leaves little room for error.
• 3x – 5x: Healthy and profitable for most Shopify stores. This is where most successful merchants operate.
• 5x – 10x: Excellent performance. Usually seen in niche products with strong product-market fit or well-optimized retargeting campaigns.
• Above 10x: Often seen only in branded search or retargeting. If your blended ROAS is this high across all campaigns, you may be under-investing in growth.

According to a 2025 report from Databox, the median ROAS for Facebook Ads across e-commerce advertisers is 2.5x, while Google Ads averages slightly higher at 3.1x. Top-quartile performers see 5x+ on both platforms.

Manually calculating ROAS across multiple platforms is tedious and error-prone. InsightIQ connects directly to your Shopify store, Google Ads, Facebook Ads, Instagram, and TikTok accounts to give you a real-time, unified ROAS dashboard.

Instead of logging into four different ad platforms and cross-referencing with your Shopify admin, InsightIQ pulls all the data into one view. You can see blended ROAS across all channels, per-platform ROAS, and even campaign-level performance — all updated automatically.

Our AI-powered insights engine also flags campaigns that are underperforming your break-even ROAS and recommends budget reallocation to maximize your overall return. Shopify merchants using InsightIQ report an average ROAS improvement of 25% within the first 60 days.