How to use this calculator
- Enter Ad spend for the campaign and the Revenue from ads it generated in the same period.
- Enter your Gross margin, the share of revenue left after the cost of goods.
- Read ROAS and compare it with the Break-even ROAS.
- Check Profit after ad spend and ROI on ad spend to see the real result.
How ROAS is calculated
ROAS (return on ad spend) is revenue divided by ad spend. A ROAS of 4x means each dollar spent on ads brought four dollars of sales. It is quick to compute but ignores what the products cost you, so it cannot tell you alone whether the ads are profitable.
ROAS = Revenue ÷ Spend Break-even ROAS = 100 ÷ Margin- Revenue = sales attributed to the ads
- Spend = total ad cost
- Margin = gross margin percentage
- Profit = Revenue × Margin ÷ 100 − Spend
That is why the calculator adds gross margin. Profit comes from gross profit on the ad revenue, minus the ad spend itself.
Example: $2,000 of ads, $7,000 of sales
Spending $2,000 to get $7,000 of revenue gives a ROAS of 3.5x, or 350%. With a 40% gross margin, break-even ROAS is 2.5x, so this campaign clears the bar. Profit after ad spend is $800, an ROI of 40% on the ad spend.
If the same spend produced only $4,000 of revenue, ROAS would be 2x, below break-even. The campaign would lose $400, a ROI of −20%, even though revenue is double the spend.
Reading the result
A good ROAS depends on margin. A business with a 20% margin needs 5x just to break even, while one with an 80% margin breaks even at 1.25x. Compare your ROAS with your own break-even, not with a generic target.
Break-even ROAS does not cover overhead, staff or returns, so aim above it. For lifetime thinking, where a customer buys again, see the customer lifetime value calculator. For the general idea of return, use the ROI calculator.
Ways to improve ROAS
- Pause audiences, keywords or placements that spend without selling.
- Improve the landing page and checkout; conversion rate lifts ROAS without extra spend.
- Raise average order value with bundles or minimum-spend offers.
- Improve margin by renegotiating supplier costs, which lowers break-even ROAS.
- Measure on a long enough window so late conversions are counted.
Assumptions and limits
The calculator uses one revenue figure and one margin for the whole campaign. Attribution is the hardest part: ad platforms can over- or under-count sales, so compare against your own sales data. It does not subtract returns, shipping, fees, creative costs or agency charges, and it ignores repeat purchases that arrive later. Treat the output as a guide for budget decisions, not as accounting.
Frequently asked questions
What is a good ROAS?
It depends on your gross margin. Anything above your break-even ROAS (100 divided by margin) makes a gross profit, and you need more to cover overhead.
How do I calculate ROAS?
Divide the revenue from ads by the ad spend. $7,000 of sales from $2,000 of ads is a ROAS of 3.5.
What is the difference between ROAS and ROI?
ROAS compares revenue with spend. ROI compares profit with spend, so it accounts for costs of goods.
What is break-even ROAS?
It is the ROAS at which gross profit equals ad spend. It equals 100 divided by your gross margin percentage.
Should I optimize for ROAS or profit?
Profit. A high ROAS on tiny spend can earn less than a lower ROAS at larger scale, so check profit in money, too.