Return on Ad Spend (ROAS) Calculator
ROAS next to the break-even ROAS your margin demands, and next to the ROI it is not, so a healthy-looking ratio cannot hide a loss.
Ad spend $15,000.00
Revenue $63,000.00
ROAS 4.20 to 1
ROAS as a percentage 420%
Spend as a share of revenue 23.81%
Gross margin 78%
Gross profit on that revenue $49,140.00
Profit after ad spend $34,140.00
Return on investment 227.6%
Break-even ROAS 1.28 to 1
Headroom 2.92 to 1
Target ROAS 5.00 to 1
Spend that target allows $12,600.00
Revenue this spend would need $75,000.00
Break-even is 1.28 to 1, which is one over the 78% margin. At 4.20 to 1
you are above it and the spend made $34,140.00 of gross profit. A ROAS
with no margin next to it cannot tell you which of those two you are in.
ROAS and ROI are different questions. The ROAS is 4.20 to 1 on revenue;
the return on the money you put in, after the cost of the goods, is
227.6%. Quoting the first as though it were the second is the most
common piece of advertising arithmetic done backwards.
A 5.00 to 1 target on this revenue allows $12,600.00 of spend, which is
$2,400.00 less than you spent. Target ROAS is a lever on volume as much
as on efficiency: a higher target buys fewer, better clicks, and a lower
one buys more of everything including the losses.
Only the costs of goods are in this. Fulfilment, payment fees, support,
returns and the salary of whoever runs the account all come after, so a
break-even ROAS is the floor rather than the target. Decide the real
target by working back from the contribution you need per order.
Attribution decides the revenue figure, and it is the softest number
here. The same week can report two very different revenues under
last-click and a data-driven model, and the ROAS moves with it while
nothing about the business changes.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
ROAS is revenue divided by ad spend. It says nothing about whether you made money, because it does not know what the goods cost.
A 3 to 1 ROAS on a 30 percent margin loses money on every order. The same 3 to 1 on an 80 percent margin is a good week. The number that settles it is the break-even ROAS, which is one over your gross margin, and it is the first thing this prints.
How to use
- Put in the revenue your attribution model credits to the spend, and the spend.
- Put in your gross margin. This is the field that turns the ratio into an answer.
- Optionally set a target ROAS to see the spend it allows and the revenue it demands.
Example
63,000 of revenue from 15,000 of spend at a 78 percent gross margin, against a 5 to 1 target:
Ad spend $15,000.00
Revenue $63,000.00
ROAS 4.20 to 1
ROAS as a percentage 420%
Spend as a share of revenue 23.81%
Gross margin 78%
Gross profit on that revenue $49,140.00
Profit after ad spend $34,140.00
Return on investment 227.6%
Break-even ROAS 1.28 to 1
Headroom 2.92 to 1
Target ROAS 5.00 to 1
Spend that target allows $12,600.00
Revenue this spend would need $75,000.00Two readings worth separating. The ROAS is 4.20 to 1. The return on the money, after the cost of the goods, is 228 percent. People quote the first as though it were the second all day, and the gap between them is the whole cost of goods.
Now run the same 45,000 of revenue on 15,000 of spend at a 30 percent margin: a 3.00 ROAS against a 3.33 break-even, and a loss of 1,500. Nothing about the ratio looks wrong.
Pitfalls
A ROAS with no margin next to it cannot be judged. This is the whole point. Break-even ROAS is one over the gross margin: 1.25 at an 80 percent margin, 2.5 at 40 percent, 5 at 20 percent. Below that line, scale loses money faster.
ROAS and ROI are not the same number. ROAS is a revenue multiple on the spend. ROI is the return on the money after costs. A 4 to 1 ROAS is a 300 percent revenue multiple and, on this margin, a 228 percent return.
Break-even ROAS is a floor, not a target. Fulfilment, payment fees, support, returns and the team all come after gross profit. Work the real target back from the contribution you need per order, and expect it to be well above the floor.
Attribution decides the revenue, and it is the softest number here. The same week reports very different revenue under last-click, a data-driven model and a platform’s own in-app numbers. The ROAS moves with the model while the business does nothing, so never compare a ROAS across two attribution setups.
New and returning customers hide inside one ROAS. A campaign that hits your existing customers reports a fine ROAS by taking credit for revenue you had already earned. If the goal is growth, the number to look at is the ROAS on new customers.
A high ROAS can mean you are underspending. The cheapest, warmest traffic converts best, so squeezing the account down to your best terms raises the ratio and shrinks the business. Target ROAS is a volume lever as much as an efficiency one.
Compatibility
Arithmetic in the browser: nothing is uploaded and nothing is stored. The share link carries the figures, so a ROAS can arrive with the margin it depends on rather than on its own.
Break-even is computed from gross margin, so a margin of zero is refused rather than producing an infinite target: at no margin no ROAS is high enough, and that is a pricing problem rather than an advertising one.
Nothing here is platform specific. Take the revenue and spend from Google Ads, Meta, Amazon, a newsletter sponsorship or a spreadsheet; the arithmetic is the same and so is the caution about where the revenue figure came from.