ROAS Calculator
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ROAS is revenue from ads divided by what the ads cost. $9,000 in sales from $2,000 of ads is a ROAS of 4.5, or 450%. Whether that is profitable depends on your margin: at a 40% margin you need a ROAS of at least 2.5 to break even.
Profit before ad costs as a percent of revenue. Used for break-even ROAS.
| Results | |
| ROAS | 4.5 (450%) |
| Revenue per $1 of ads | $4.50 |
| ACoS (ad cost of sales) | 22.22% |
| Profit | |
| Break-even ROAS | 2.5 |
| Gross profit on ad sales | $3,600.00 |
| Profit after ad spend | $1,600.00 |
Show steps
- ROAS = revenue / ad spend = $9,000.00 / $2,000.00 = 4.5.
- ACoS = ad spend / revenue = $2,000.00 / $9,000.00 = 22.22%.
- Break-even ROAS = 1 / margin = 1 / 40% = 2.5.
- Profit after ads = $9,000.00 x 40% – $2,000.00 = $1,600.00.
How to use the ROAS calculator
- Enter what you spent on the ads.
- Enter the revenue the ads brought in, from your ad platform or store reports.
- Optionally enter your gross profit margin to see the break-even ROAS and the profit after ad costs.
- Press Calculate.
ROAS formula
- ROAS = revenue from ads ÷ ad spend
- ROAS % = ROAS × 100
- ACoS = ad spend ÷ revenue × 100%, which is 1 ÷ ROAS as a percent
- Break-even ROAS = 1 ÷ gross margin
- Profit after ads = revenue × margin − ad spend
A ROAS of 4 means every $1 of ads brought $4 of sales. ROAS measures sales, not profit, so it has to be compared with your margin.
Break-even ROAS
Your ads break even when the gross profit from ad sales equals the ad cost: revenue × margin = spend. Dividing both sides by spend and margin gives break-even ROAS = 1 ÷ margin.
| Gross margin | Break-even ROAS | Max ACoS |
|---|---|---|
| 20% | 5.00 | 20% |
| 25% | 4.00 | 25% |
| 40% | 2.50 | 40% |
| 50% | 2.00 | 50% |
| 60% | 1.67 | 60% |
| 80% | 1.25 | 80% |
The highest ACoS you can afford equals your margin.
Worked examples
| Ads | Revenue | Margin | ROAS | Profit after ads |
|---|---|---|---|---|
| $2,000 | $9,000 | 40% | 4.5 | 9,000 × 0.4 − 2,000 = $1,600 |
| $1,500 | $3,000 | 40% | 2.0 | 3,000 × 0.4 − 1,500 = −$300 |
| $500 | $2,500 | 25% | 5.0 | 2,500 × 0.25 − 500 = $125 |
The second campaign has a ROAS of 2, which sounds fine, but with a 40% margin it needs 2.5 to break even, so it loses money.
ROAS vs ROI
ROAS compares revenue with ad spend only. ROI compares profit with the full investment. A campaign can have a high ROAS and a poor ROI if products are expensive to make or ship. Use the ROI calculator when you know the total costs.
Common mistakes
- Judging ROAS without the margin. A ROAS of 3 is profitable at a 50% margin and a loss at a 25% margin.
- Counting all sales as ad sales. Some buyers would have bought anyway; ad platforms often attribute generously.
- Mixing up ROAS and ACoS. They are reciprocals: a ROAS of 4 is an ACoS of 25%.
ROAS practice quiz: 10 questions
Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.
Break-even ROAS = 1 ÷ 0.25 = 4. Below a ROAS of 4, ads cost more than the gross profit they bring.
Gross profit = 3,200 × 0.30 = 960. Profit after ads = 960 − 800 = $160.
Break-even ROAS at a 50% margin is 1 ÷ 0.5 = 2. A ROAS of 1.5 is below it, so the ads lose money.
ROAS divides revenue by ad spend. ROI divides profit by the total investment, so it accounts for all costs.
A: 300 × 0.4 − 100 = $20. B: 250 × 0.6 − 100 = $50. B has a lower ROAS but a higher profit.
Quiz complete
Frequently asked questions
How do you calculate ROAS?
Divide the revenue that came from your ads by what you spent on them. $9,000 of sales from $2,000 of ads is a ROAS of 4.5, or 450%.
What is a good ROAS?
Any ROAS above your break-even point makes money. Find it with 1 ÷ your gross margin: at a 40% margin you need more than 2.5, at a 25% margin more than 4.
What is break-even ROAS?
The ROAS where the gross profit from ad sales exactly pays for the ads. It equals 1 divided by your gross profit margin.
What is the difference between ROAS and ACoS?
They are reciprocals. ROAS is revenue ÷ ad spend; ACoS (advertising cost of sales) is ad spend ÷ revenue, shown as a percent. A ROAS of 5 is an ACoS of 20%.
Is ROAS the same as ROI?
No. ROAS compares revenue with ad spend only. ROI compares profit with all of the money invested, including product and other costs.
Sources
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