ROAS Explained: How to Know If Your Marketplace Ads Are Making Money

Marketplace ads can bring many orders, but they also bring a bill. The number most sellers watch is ROAS. It is useful, but only if you know what a good ROAS means for your product.

What is ROAS

If you spend ₹1,000 on ads and the ads bring ₹5,000 of sales, ROAS is 5. It tells you how many rupees of sales you got for each rupee of ads.

Why a high ROAS can still lose money

ROAS counts the sales, not the profit. If your profit margin is small, even a ROAS of 4 can lose money, because fees, product cost and returns eat most of the sale. This is the mistake that makes sellers happy with the ad report and unhappy with the bank balance.

Find your break-even ROAS

First find your profit margin before ads, as a share of the selling price, after fees, shipping, product cost, packing and expected returns.

Margin before ads	Break-even ROAS
10%	10
20%	5
25%	4
33%	3
50%	2

Example: a product sells at ₹500 with ₹100 profit before ads (20%). Break-even ROAS is 5. If your ads give ROAS 3, you lose ₹0.07 on every rupee of sales. If they give ROAS 8, you make a good profit.

A simple way to act on it

• ROAS well above break-even: increase the budget slowly, 20 to 30 percent at a time, and watch the result.
• Near break-even: improve the listing (photos, price, title) before spending more.
• Below break-even for 2 weeks or more: reduce or stop. Do not hope it will get better by itself.
• Spend but no sales at all: stop that ad right away. Check the keyword, price and stock.

Things to remember

1. Calculate ROAS per SKU, not for the whole account. Some SKUs carry the others.
2. Give a new ad enough days to collect data, but set a limit on how much you will test.
3. Returns on ad-driven orders reduce the real result. Check the return rate of the SKUs you advertise.
4. Some ad sales would have happened anyway. If your organic sales are strong, test with a lower budget.

Seller Book connects your ad spend with the profit of each SKU, shows which ads have spend but no sales, and which ads lose money after fees and returns, so you know what to stop and what to grow.