ROAS vs profit
ROAS ignores what it costs to deliver the work. A ROAS of 4 can be very profitable for a service with high margins and a loss for a business with thin ones.
| Gross margin | Break-even ROAS |
|---|---|
| 25% | 4.0 |
| 40% | 2.5 |
| 50% | 2.0 |
| 75% | 1.33 |
Break-even ROAS equals one divided by your margin. Below that line, the ads lose money even if they bring sales.
ROAS for lead-based businesses
Online stores see revenue in the ad platform right away. Service businesses close deals later, by phone or in person. To measure ROAS, send the value of closed jobs back to Google Ads. Google's enhanced conversions for leads let you match those sales to the original click.
Until then, estimate it. Multiply leads by your close rate and average job value, then divide by ad cost.
Lifetime value changes the answer
Many local customers come back. A first HVAC repair may lead to a maintenance plan and a new system years later. A first-job ROAS of 2 can turn into a lifetime ROAS of 6.
Good example. A roofing company imports signed contract values into Google Ads and sees which keywords bring the biggest jobs, not just the most leads.
Bad example. A company reports ROAS from online form values that it guessed, and decisions rest on made-up numbers.
Read what a realistic ROAS is. Our PPC management connects ad spend to closed revenue wherever your CRM allows.