How to use the roas calculator
- Enter the revenue attributed to your ads and the ad spend for the same period.
- Enter your gross margin: revenue minus cost of goods, as a percentage of revenue.
- Optionally enter the profit margin you want to keep after product costs and ad spend.
- Compare your actual ROAS with the break-even and target ROAS.
Worked example
$10,000 revenue from $2,500 ad spend at a 40% gross margin
ROAS is 4.00:1 (400%). At a 40% margin the break-even ROAS is 2.50:1, so the ads are profitable: gross profit of $4,000 minus $2,500 spend leaves $1,500. To keep 10% of revenue as profit you need a target ROAS of 3.33:1.
How it works
ROAS = revenue ÷ ad spend (shown as a ratio and × 100 as a percentage). Break-even ROAS = 1 ÷ gross margin, because each unit of revenue only contributes its margin toward covering spend. Target ROAS = 1 ÷ (gross margin − target profit margin), where the target profit margin is the share of revenue you want left after product costs and ad spend.
Assumptions
- Revenue is what your ad platform or analytics attributes to the ads; attribution models differ.
- Gross margin and target margin are your own figures.
- Other costs (agency fees, tools, shipping not in COGS) are not included; use the advertising ROI calculator for those.
Frequently asked questions
What is a good ROAS?
There is no universal number. A good ROAS is one above your break-even ROAS, which depends on your margin. A business with a 25% margin needs 4:1 just to break even; one with an 80% margin breaks even at 1.25:1.
Is ROAS the same as ROI?
No. ROAS compares revenue to ad spend. ROI compares profit to cost. A campaign can have a high ROAS and still lose money if margins are thin.
Why does my ad platform ROAS differ from my analytics?
Platforms use different attribution windows and models and may count view-through conversions. Pick one source and use it consistently.
Limitations
- Uses the revenue you enter; it does not connect to ad platforms.
- Ignores customer lifetime value; a low first-order ROAS can still pay off with repeat purchases.