Target ROAS

Target ROAS is the average conversion value per unit of advertising cost that you ask Google Ads to aim for.

By Berend Vrakking, founder of Product Metrics. Updated 15 October 2026.

Formula

Revenue-based target ROAS = 1 ÷ (contribution margin rate − desired profit rate)

Both rates are shares of net revenue. Desired profit means contribution after ads, before overheads. The denominator must be positive. Google Ads receives the ratio as a percentage: 5 becomes 500%.

Example

Leaving room for profit
Input	Value
Contribution margin before ads	30%
Desired profit after ads	10% of revenue
Available ad spend on €100.00 revenue	€20.00
Target ROAS (1 ÷ 0.20)	500%

The target leaves €10.00 after €70.00 of variable costs and €20.00 of advertising, before overheads. Illustrative data.

Put it into practice

Calculate it: Break-even ROAS calculatorApply the definition to your products.
Read the guide: Target ROAS from marginWork through the concept in more detail.

For one product, and for an account

A campaign target averages across products with different margins. Work out product thresholds before grouping them. A margin-derived target is an economic requirement, not proof that demand or campaign performance can achieve it.

Common mistake

Treating the target as a guaranteed minimum for every sale. Google Ads aims for an average; individual conversions and products can fall above or below it.

Questions

Is target ROAS the same as break-even ROAS?

No. Break-even ROAS is the lowest return that covers your included costs and advertising, with no profit left. A target ROAS that leaves room for profit sits above it. In the example, a 30% margin and 10% desired profit give a target of 500%, against a break-even ROAS of 3.33.

Does this formula apply to profit conversion values?

No. The formula assumes revenue is your conversion value. If you send profit as the conversion value, the target must be set on that profit value instead, and a revenue-based target would be wrong. Use this formula only when the conversion action reports revenue.

Sources

Google Ads: about target ROAS bidding

Keep reading

Break-even ROASStart with the threshold before adding profit.
Conversion valueUnderstand the value your bidding strategy uses.