ROAS calculator
Return on ad spend tells you how many dollars of sales each ad dollar brings in, but it only means something next to your break-even ROAS. Enter your ad spend, the revenue it produced, your product margin and the fees on each sale, and this calculator shows your ROAS, the ROAS you need to break even and the profit or loss the ads made. The table underneath shows profit at other ROAS levels, so you can set a realistic target.
Your ROAS against the lines that matter
Your actual ROAS next to the level where ads stop losing money and the level that hits your profit goal.
Profit at other ROAS levels
The same ad spend and margins at different returns. Rows below break-even lose money on every dollar spent.
| ROAS | Revenue | Contribution | Profit after ads | Profit per ad dollar |
|---|
How ROAS and break-even ROAS are worked out
ROAS is a simple ratio of revenue to ad spend. The useful part is comparing it with break-even, which comes from your margins.
Contribution is what a sale leaves after the cost of the product and the fees on that sale, before any ad spend.
ROAS
Revenue divided by ad spend.
ROAS = revenue ÷ ad spend
Contribution margin
What is left of each dollar of sales after product cost and fees.
contribution margin = gross margin − fees
Break-even ROAS
The ROAS at which contribution exactly pays for the ads.
break-even ROAS = 1 ÷ contribution margin
Target ROAS
Keeps the share of contribution you want as profit.
target ROAS = break-even ÷ (1 − profit kept)
Profit after ads
Contribution minus ad spend and any management fee.
profit = revenue × contribution margin − spend − fee
ROAS questions
How do you calculate ROAS?
Divide the revenue your ads brought in by what you spent on them. $5,000 in sales from $1,000 of ad spend is a ROAS of 5, often written 5x or 500 percent. It measures revenue, not profit, which is why you also need a break-even ROAS.
What is break-even ROAS?
The ROAS at which ad spend exactly uses up the profit from the sales it brings. It equals 1 divided by your margin after product costs and fees. With a 40 percent margin, break-even ROAS is 2.5: below that, every ad dollar loses money.
What is a good ROAS?
There is no single good number. A business with 80 percent margins can profit at a ROAS of 2, while one with 25 percent margins needs at least 4 just to break even. Compare your ROAS with your own break-even figure, not with averages from other industries.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend only. ROI compares profit with all the money invested, including product costs, fees and staff time. A campaign can show a healthy ROAS and still lose money once those costs are counted.
Should I count repeat purchases?
If customers come back, the first order understates what the ad was worth. Many businesses accept a first-order ROAS near break-even because the customer's later orders bring the profit. Use our lead value calculator to put a number on lifetime value.
Why does my ad platform show a different ROAS?
Ad platforms use their own attribution windows and often count sales that would have happened anyway. Your store's own sales data or a blended ROAS across all channels, total revenue divided by total ad spend, is a useful reality check.