ROAS Target Calculator

Work out your Target ROAS from your own margins: breakeven first, then a profit buffer on top.

Checked against Google Ads Help on 19 October 2026. A Google badge links to the help page that says it. Onward guidance marks our own rules.

Calculator

Section 1. Breakeven ROAS

The lower the margin, the higher the breakeven ROAS, and the less room bidding has before orders lose money.

What counts as a variable cost

Contribution margin is revenue minus variable costs. It isn't gross margin, which only takes off the cost of goods, and it isn't net profit, which also takes off fixed costs.

Work at basket level, not per item

Calculate margin per order. That handles baskets with several items and different order values: fixed costs per order weigh less on large orders and more on small ones, and the average takes care of both.

If your catalogue splits into clear margin bands, run the calculation per band. That gives you the inputs for margin-tier campaigns.

Section 2. Target ROAS = breakeven + profit buffer

These are the same figures the calculator gives. The buffer is the gap above breakeven.

Our buffers: 20–30% above breakeven at 40% margin or more, 25–35% at 25–40%, 30–50% at 15–25%, and 40–60% below 15%. The thinner the margin, the bigger the buffer, because the same percentage dip in performance takes a bigger share of the profit. Onward guidance

Section 3. Margin tiers

Per-item margins don't work when items are rarely bought alone. For a mixed catalogue, group products into margin tiers and give each tier its own campaign and target. Onward guidance

Step 1. Sort products into tiers

Our tier rules, written into custom label 4 through a supplemental feed Onward guidance:

Step 2. Work out contribution margin per tier

Tiers are sorted on gross margin, but targets come from contribution margin. For each tier, take the last 90 days of orders made up mostly of that tier's products and run the basket-level calculation from Section 1.

Step 3. One campaign per tier

Build one Standard Shopping campaign per tier, filtered on custom label 4, with that tier's target and its own max CPC limit. Set priority by tier: margin hero High, basket builder Medium, learning Low. Run each one on Manual CPC or Maximise clicks until it reaches 30 conversions a month, then move it to Target ROAS. Onward guidance Performance Max can't join a portfolio bid strategy Google or use a shared budget Google, so a PMax campaign keeps its own target and budget.

Step 4. Pool only where there's something to pool

A portfolio is worth it when two or more Search or Standard Shopping campaigns share the same target. A portfolio with one campaign in it adds no volume. How big a gap between targets justifies a separate campaign is your call.

Section 4. Worked examples

Section 5. First-order ROAS when customers come back

Everything above assumes each order has to pay for itself. That holds if customers don't come back. If they do, with a reliable repeat rate, you can accept a lower first-order ROAS because later orders cover the gap.

The formula

This gives the breakeven first-order ROAS, where lifetime contribution exactly covers the cost of acquiring the customer. Your target sits above it by a buffer.

Worked example

First-order AOV:                  £100
Contribution margin:              40%
CLV (4 total orders incl first):  £400
Repeat purchase factor:           (400 / 100) - 1 = 3.0

Breakeven first-order ROAS:       1 / (0.40 × (1 + 3.0))
                                = 1 / 1.6
                                = 0.625

Total lifetime contribution:      £400 × 40% = £160
Max profitable acquisition cost:  £160 per customer
Implied breakeven ROAS on £100:   100 / 160 = 0.625 ✓

At a first-order ROAS of exactly 0.625, you spend £160 to win a customer worth £160 in lifetime contribution, so you break even over their lifetime. With a 25% buffer the target is 0.625 × 1.25 ≈ 0.78: you'd spend up to £128 to win a £100 first order.

Setting it up in Google Ads

1. Customer acquisition goal, "Bid higher for new customers than existing customers". Google adds the extra value you set to each new customer's first purchase. Google It's an amount, not a multiplier: five new customers at £25 each show as £125 of new customer lifetime value. Google Google's suggested starting point is to value a new customer at 2x a regular customer. Google We set it to the extra revenue expected after the first order: lifetime value minus first-order AOV, so £300 in the example. Then keep Target ROAS on a single-order basis, because the reported value for a new customer now approximates their lifetime revenue. Onward guidance This option needs Target ROAS or Maximise conversion value Google, and an audience segment with at least 1,000 active members. Google
2. "Only bid for new customers". Google recommends it only for strict acquisition budgets or non-purchase goals such as leads, and says to run a separate campaign for existing customers. Google
3. Conversion value rules can raise, multiply or set conversion values by audience, location or device. Google To value returning customers lower, apply a rule to a customer list audience.

Section 6. Bidding on profit (POAS)

With POAS you send contribution profit (revenue ex VAT minus cost of goods, shipping, payment fees and returns allowance) to Google Ads as the conversion value instead of revenue, so bidding optimises for profit. Breakeven POAS is 1.0 only on that basis. Send gross profit (revenue minus cost of goods only) and breakeven sits above 1.0: in Example A, £48.00 gross profit ÷ £36.80 contribution = 1.30.

Two routes. Google's own: add cost of goods sold to your Merchant Center feed and send basket data with purchase conversions, and Google Ads reports gross profit. Google That's reporting, not bidding: Google says the cost data you share is for reporting purposes. Google Google also describes profit goals, in beta, for Performance Max and Standard Shopping. Google Check whether your account has them. The other route is a server-side tool that works out each order's profit and sends it as the conversion value. Several tools do this, and the steps are the same whichever you use.

When to consider it: once margin tiers are running and you want more precision, or when the catalogue needs too many tiers to manage. Until then, margin-tier campaigns do most of the job with no integration cost. Onward guidance

Section 7. Checklist before you set or change a target

• Do I know my basket-level contribution margin, not gross margin and not per item?
• Have I included shipping, payment fees and a returns allowance?
• Does margin vary a lot across the catalogue? If so, split into tiers with custom labels.
• Is the target above breakeven, and on the same VAT basis as the conversion value Google Ads receives?
• Is the starting target at or below the campaign's recent actual ROAS Google, measured over a window that leaves out the most recent conversion delay Google, and still above breakeven? If both can't be true, fix the economics before touching the bid strategy.
• Is the buffer realistic for the margin? A target far above what the campaign can reach limits traffic. Google
• Do customers come back? If so, use Section 5 and consider the customer acquisition goal.
• Am I moving the target by more than 20% in one go? Google says you can change targets as often and by as much as you like. Google We keep each step to 15–20%, at least 7 days apart, so each one can be read. Onward guidance
• Is the campaign limited by budget? Since 17 August 2026, budget-limited campaigns on Target ROAS or Target CPA bid towards their target instead of beating it. Google Decide whether the budget or the target is the real limit.
• Does the campaign have at least 15 conversions in the last 30 days, Google's minimum for Target ROAS on Search and Shopping? Google We wait for 30 a month. Onward guidance If it's short, pool it with campaigns on the same target, or stay on Manual CPC or Maximise clicks.
• Is the bid strategy showing Learning after a new strategy, a setting change, or campaigns added or removed? Google Wait before judging it. A target change on its own doesn't trigger Learning. Google

Section 8. Quick reference

Sources

Every Google page this calculator relies on, checked on 19 October 2026.

Google Ads Help

• About bid strategy statuses
• About conversion value rules
• About customer lifecycle goals
• About shared budgets
• About Target ROAS bidding
• Bid strategy report for automated bidding strategies
• Changes to target-based bid strategies
• Create a portfolio bid strategy
• Duration of the learning period for campaigns and what affects it
• How our bidding algorithms learn
• Measure your lifecycle goals campaigns
• Step 2 of 5: Configure your lifecycle goals
• Step 2: Provide cost of goods sold (COGS) feed attribute to report on profit margins
• Step 2: Set your bidding preferences
• Step 3 of 5: Activate lifecycle goals in your campaign
• Tips on measuring Smart Bidding performance
• Top tips to optimise for the festive season and beyond with Google AI

Google Merchant Center Help

• Cost of goods (COGS) [cost_of_goods_sold]