What is COGS in ecommerce?

COGS (Cost of Goods Sold) is the direct cost of products you sell. This includes manufacturing cost, wholesale purchase price, packaging materials, and any direct labor. It does NOT include marketing, rent, or salaries. For dropshipping, it's what you pay your supplier per unit.

Why is my True ROAS lower than Standard ROAS?

Standard ROAS only considers Revenue ÷ Ad Spend. True ROAS factors in your product costs (COGS), giving a more accurate picture. If your COGS is 50% of revenue, your True ROAS will be roughly half of your Standard ROAS.

What is a good ROAS for ecommerce?

It depends on your margins. A 4× ROAS is often cited as 'good,' but if your COGS is 70%, you need at least 3.3× just to break even. Calculate your break-even ROAS first, then aim for 1.5-2× above that for healthy profits.

How do I calculate break-even ROAS?

Break-even ROAS = 1 ÷ Gross Margin. If your gross margin is 40% (0.40), your break-even ROAS is 1 ÷ 0.40 = 2.5×. This means you need at least 2.5× ROAS to cover your product costs before considering profit.

Should I include shipping in COGS?

If you offer free shipping, include it in your costs. If customers pay for shipping, don't include it in revenue or costs calculations. The key is consistency—always calculate the same way for accurate comparisons.

What is COGS in ecommerce?

COGS (Cost of Goods Sold) is the direct cost of products you sell. This includes manufacturing cost, wholesale purchase price, packaging materials, and any direct labor. It does NOT include marketing, rent, or salaries. For dropshipping, it's what you pay your supplier per unit.

Why is my True ROAS lower than Standard ROAS?

Standard ROAS only considers Revenue ÷ Ad Spend. True ROAS factors in your product costs (COGS), giving a more accurate picture. If your COGS is 50% of revenue, your True ROAS will be roughly half of your Standard ROAS.

What is a good ROAS for ecommerce?

It depends on your margins. A 4× ROAS is often cited as 'good,' but if your COGS is 70%, you need at least 3.3× just to break even. Calculate your break-even ROAS first, then aim for 1.5-2× above that for healthy profits.

How do I calculate break-even ROAS?

Break-even ROAS = 1 ÷ Gross Margin. If your gross margin is 40% (0.40), your break-even ROAS is 1 ÷ 0.40 = 2.5×. This means you need at least 2.5× ROAS to cover your product costs before considering profit.

Should I include shipping in COGS?

If you offer free shipping, include it in your costs. If customers pay for shipping, don't include it in revenue or costs calculations. The key is consistency—always calculate the same way for accurate comparisons.

ROAS Calculator

Ecommerce ROAS Calculator

Calculate your TRUE ecommerce ROAS including product costs (COGS). See if your ads are actually profitable after all costs.

100% Free

Ecommerce Optimized

Instant Results

Ecommerce ROAS Calculator

Ad Spend

Revenue

COGS (Cost of Goods Sold)

Your Ecommerce Results

Highly Profitable

Standard ROAS

5.00×

True ROAS

3.00×

Break-even ROAS

1.67×

Gross Profit

$3,000

Net Profit

$2,000

Profit Margin

40.0%

Profit Breakdown

COGS

Ad Spend

Net Profit

COGS: 40.0% Ad Spend: 20.0% Net Profit: 40.0%

Excellent profit margins! Your ecommerce ads are performing very well.

When to Use This Calculator

Use this calculator for a platform-agnostic view of your e-commerce advertising performance. It is ideal when you run ads across multiple channels and want a single, unified metric. DTC brands, Shopify store owners, and e-commerce managers use this to report blended ROAS across their entire ad portfolio — giving a clear signal on overall marketing efficiency.

How to Read Your Results

Blended e-commerce ROAS should always be evaluated against your gross margin. If your average product margin is 60%, a 2x blended ROAS means you are spending 50% of revenue on ads — leaving only 10% for overhead and profit. Most healthy e-commerce businesses target a blended ROAS between 3x and 5x. If yours is below breakeven, identify which channel is dragging the average down and cut or optimize there.

Ecommerce ROAS Benchmarks by Category

Compare your performance to typical ecommerce benchmarks:

Category	Avg ROAS	Avg Margin	Notes
Fashion/Apparel	3-5×	30-50%	Seasonal variations common
Electronics	2-4×	15-25%	Lower margins, higher AOV
Home & Garden	3-6×	35-50%	Higher AOV, less competition
Beauty/Cosmetics	4-8×	60-80%	High margins, repeat purchases
Health/Supplements	3-5×	40-60%	Subscription potential
Jewelry	4-8×	50-70%	High margins, impulse buys

Benchmarks vary by brand, pricing strategy, and target market. Data based on aggregated industry reports from Google, Meta, and ecommerce platforms (2023-2024).

Ecommerce ROAS Formulas

Standard ROAS

Standard ROAS = Revenue ÷ Ad Spend

True ROAS (Profit-Based)

True ROAS = Gross Profit ÷ Ad Spend

Net Profit

Net Profit = Revenue - COGS - Other Costs - Ad Spend

Break-even ROAS

Break-even ROAS = 1 ÷ Gross Margin

Example: $5,000 revenue, $2,000 COGS, $1,000 ad spend → Standard ROAS: 5×, True ROAS: 3×, Net Profit: $2,000

Common Ecommerce ROAS Mistakes

Only Looking at ROAS, Not Profit

A 5× ROAS looks great, but if your COGS is 80% of revenue, you're still losing money on every sale.

Ignoring Hidden Costs

Don't forget shipping, platform fees, payment processing, returns, and overhead costs.

Confusing Revenue with Profit

Revenue is not profit. Always calculate your true profit margin after all costs.

Not Knowing Break-even Point

Without knowing your break-even ROAS, you can't set realistic advertising goals.

Frequently Asked Questions

⚠️ Note: This calculator provides estimates based on the inputs you provide. Actual profitability may vary based on returns, chargebacks, and overhead. Consult with a financial professional for detailed analysis.

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