ROAS Calculator (Return on Ad Spend)
Enter what you spent on ads and the revenue they brought in. Add your profit margin to see whether that ROAS actually makes money and what ROAS you need to hit your profit goal.
ROAS by channel
| Channel | Spend | Revenue | ROAS | Net profit | Share of spend | |
|---|---|---|---|---|---|---|
| Total / blended | – | – | – | – | 100% |
How to use the ROAS Calculator (Return on Ad Spend)
- Enter your ad spend and the revenue attributed to those ads.
- Add your gross margin as a percentage, or switch to cost of goods and enter your product costs.
- Set a target net profit to get the ROAS you need to reach it.
- Optionally enter conversions to see cost per acquisition, average order value and break-even CPA.
- Compare channels in the table below: add a row per ad platform to see each ROAS and the blended total.
ROAS formulas
- ROAS = revenue from ads ÷ ad spend
- Break-even ROAS = 1 ÷ gross margin
- Target ROAS = 1 ÷ (gross margin − target net profit margin)
- Net profit = revenue × gross margin − ad spend
- ROI on ad spend = net profit ÷ ad spend
- CPA = ad spend ÷ conversions; break-even CPA = average order value × gross margin
Example: $5,000 of ads produce $20,000 of sales at a 40% gross margin. ROAS = 20,000 ÷ 5,000 = 4.0x. Gross profit is $8,000, so net profit after ads is $3,000 and ROI is 60%. Break-even ROAS is 1 ÷ 0.40 = 2.5x, and to keep 10% of revenue as profit you need 1 ÷ (0.40 − 0.10) = 3.33x. With 250 orders, CPA is $20, AOV $80 and break-even CPA $32.
Break-even ROAS by margin
| Gross margin | Break-even ROAS | ROAS for 10% net profit | ROAS for 20% net profit |
|---|---|---|---|
| 20% | 5.00x | 10.00x | not possible |
| 30% | 3.33x | 5.00x | 10.00x |
| 40% | 2.50x | 3.33x | 5.00x |
| 50% | 2.00x | 2.50x | 3.33x |
| 60% | 1.67x | 2.00x | 2.50x |
| 70% | 1.43x | 1.67x | 2.00x |
| 80% | 1.25x | 1.43x | 1.67x |
Low-margin products need a very high ROAS to be profitable, which is why the same ROAS can be excellent for a software subscription and a loss for a reseller.
Reading ROAS correctly
- Attribution windows differ. Google Ads, Meta and TikTok each count conversions with their own click and view windows, so platform ROAS figures often add up to more than your real sales. Compare them with blended ROAS from your own revenue data.
- New vs returning customers. A campaign aimed at new customers can run below break-even on the first order and still be worth it if repeat purchases (customer lifetime value) cover the gap.
- Diminishing returns. ROAS usually falls as you scale spend on a channel. Judge an increase by the extra revenue it brings (marginal ROAS), not by the average.
- Use revenue net of refunds and discounts where possible, and keep shipping and payment fees in your margin.
Improving ROAS
ROAS rises when you either earn more revenue per click or pay less for each one. Common levers are tighter audience and keyword targeting, pausing ads and placements that sit below break-even, better landing pages that raise conversion rate, and higher average order values through bundles or free-shipping thresholds. Raising your margin also lowers the ROAS you need, so supplier prices and shipping costs are part of ad performance too.
Frequently asked questions
How do you calculate ROAS?
ROAS = revenue from ads ÷ ad spend. If you spend $5,000 and the ads generate $20,000 in sales, your ROAS is 4.0x, often written 4:1 or 400%.
What is a good ROAS?
It depends on your margin. A business with 25% gross margin needs at least 4x just to break even, while one with 70% margin breaks even at about 1.43x. Use the break-even ROAS here rather than a generic benchmark; 3x–4x is often quoted only as a rough rule of thumb.
What is break-even ROAS?
It is the ROAS at which gross profit from the sales exactly covers the ad spend: break-even ROAS = 1 ÷ gross margin. With a 40% margin, break-even is 1 ÷ 0.40 = 2.5x.
What is the difference between ROAS and ROI?
ROAS compares revenue to ad spend and ignores product costs. ROI compares profit to cost: here, net profit after cost of goods and ad spend, divided by ad spend. A campaign can have a healthy-looking ROAS and still lose money.
What is blended ROAS?
Blended ROAS is total revenue divided by total ad spend across all channels. It avoids double-counting when several platforms claim the same sale and shows whether your overall marketing pays off.
What should I include in the margin?
Include every variable cost of a sale: product or manufacturing cost, shipping, payment fees, packaging and returns. Fixed overheads are usually left out of break-even ROAS.