There is no universal number: it is entirely a function of margin. An 80%-margin service is profitable at 1.5x; a 20%-margin store needs 5x just to break even. Compute your breakeven first, then judge.

Should I use ROAS or cost per lead for a service business?

If revenue arrives weeks after the click, track cost per qualified lead against what a client is worth. ROAS works when purchase follows click closely; long sales cycles need the lead-value math instead.

Why is my platform-reported ROAS higher than reality?

Platforms claim credit for conversions that would have happened anyway, especially on brand terms and retargeting. Check against blended math: total revenue ÷ total ad spend across everything. The truth is usually between the two.

Small business

ROAS calculator

A 4x ROAS sounds great until you remember your margin is 25%, which makes 4x the breakeven, not the win. This computes the return and the threshold together, so the number means something.

Your numbers

Ad spend

Total spend for the period or campaign.

Attributed revenue

Revenue the ads drove, per your attribution.

Gross margin

What is left of revenue after direct costs, before ad spend. Services often 50-80%, e-commerce 20-40%.

Results

ROAS4x

Breakeven ROAS: 2.5x
Profit after ad spend: $600
Profit per ad dollar: $0.6

Estimate

workingfigures.com/calculators/roas-calculator

The formula

ROAS = revenue ÷ spend. Breakeven ROAS = 1 ÷ gross margin. Profit = revenue × margin − spend. A campaign is only profitable above the breakeven line.

What this ignores

Attribution error (platforms overclaim), lifetime value beyond the first purchase, and overheads outside gross margin. New-customer campaigns can rationally run below breakeven if repeat business is real and measured.

FAQ

What is a good ROAS?: There is no universal number: it is entirely a function of margin. An 80%-margin service is profitable at 1.5x; a 20%-margin store needs 5x just to break even. Compute your breakeven first, then judge.
Should I use ROAS or cost per lead for a service business?: If revenue arrives weeks after the click, track cost per qualified lead against what a client is worth. ROAS works when purchase follows click closely; long sales cycles need the lead-value math instead.
Why is my platform-reported ROAS higher than reality?: Platforms claim credit for conversions that would have happened anyway, especially on brand terms and retargeting. Check against blended math: total revenue ÷ total ad spend across everything. The truth is usually between the two.