ROAS Calculator
Calculate your Return on Ad Spend and optimize your marketing budget for maximum profitability
Ad Campaign Details
Enter your advertising metrics
Total amount spent on advertising
Revenue generated from your ad campaign
Your product/service profit margin for ROI calculation
Ready to Calculate
Enter your ad spend and revenue to see your ROAS and performance metrics in real-time
What is ROAS? Understanding Return on Ad Spend
Return on Ad Spend (ROAS) measures how much revenue you generate for every dollar you spend on advertising. It's the most direct way to gauge whether your ad campaigns are making or losing money. A ROAS of 300% means you earn $3 for every $1 you invest in ads.
Digital marketers, e-commerce businesses, and advertising agencies rely on ROAS to make critical budget decisions. If you're running Facebook ads, Google Ads, or any paid marketing campaign, ROAS tells you which channels deserve more budget and which ones are draining cash. Unlike broader metrics like ROI that factor in all business costs, ROAS focuses specifically on advertising performance.
ROAS matters because it reveals the truth about your ad performance. You might feel like your campaign is working because you see clicks and traffic, but if you're spending $5,000 and only generating $3,000 in revenue, you're losing $2,000. ROAS cuts through vanity metrics and shows real financial impact.
ROAS vs ROI: What's the Difference?
ROAS only looks at revenue from ads divided by ad costs. It doesn't account for product costs, shipping, employee salaries, or other expenses.
ROI considers your total profit after all expenses. A 400% ROAS might look great, but if your profit margin is only 20%, you're barely breaking even after operational costs. Both metrics matter, but they tell different stories. Calculate your overall business profitability with our ROI calculator.
Real-world example: An online clothing store spends $2,000 on Instagram ads and generates $8,000 in sales. Their ROAS is 400%. Sounds good, right? But if each item costs $30 to make and ship, and they sold 200 items at $40 each, their actual profit is only $2,000. After paying the $2,000 ad cost, they break even. This is why understanding both ROAS and profit margins is critical for sustainable growth.
How to Use the ROAS Calculator
You'll need two numbers before you start: your total ad spend and the revenue generated from those ads. Don't guess these numbers—pull them from your actual campaign data. If you use multiple ad platforms, add up all spending and all revenue from the same time period.
Step-by-Step Guide
- 1.Select your currency from the dropdown menu. The calculator supports 10 major currencies including USD, EUR, GBP, and more.
- 2.Enter your ad spend — the total amount you paid for advertising during your campaign period. Include all costs: platform fees, creative production, and agency fees if applicable.
- 3.Choose "Yes" or "No" for whether you know your revenue. If you're planning a campaign, select "No" to see what revenue you'd need to hit target ROAS levels.
- 4.Enter your ad revenue (if you selected "Yes") — the total sales generated directly from your ad campaign. Only count revenue you can attribute to these specific ads.
- 5.Add your profit margin (optional) — if you know your product's profit margin percentage, enter it to see your true net profit after costs.
The ROAS calculator shows your results instantly as you type. You'll see your ROAS percentage, profit amount, ROI, and a performance rating that tells you whether your campaign is losing money, breaking even, or crushing it.
Common Mistakes to Avoid
- •Don't forget to include ALL ad costs (creative production, platform fees, agency costs)
- •Only count revenue directly attributed to your ads, not total store sales
- •Use the same time period for both ad spend and revenue (don't compare July spending to August revenue)
- •Account for attribution windows—sales might come days or weeks after someone sees your ad
Understanding the ROAS Formula
The ROAS calculation is straightforward. You divide revenue by ad spend, then multiply by 100 to get a percentage. Here's the formula broken down:
ROAS = (Revenue from Ads ÷ Cost of Ads) × 100
Revenue from Ads = Total sales generated directly from your advertising campaign (measured in your chosen currency)
Cost of Ads = Total amount spent on the advertising campaign, including all associated costs (measured in same currency)
Result = ROAS percentage showing return on investment
Example Calculation #1: Profitable Campaign
A furniture store spends $5,000 on Google Ads over one month. The campaign generates $20,000 in sales.
ROAS = ($20,000 ÷ $5,000) × 100
ROAS = 4 × 100
ROAS = 400%
This means for every $1 spent on ads, the store earned $4 back. That's a $15,000 profit before accounting for product costs and other expenses. Not bad, but we need to check if that's enough after all costs.
Example Calculation #2: Losing Money
An online course creator spends $3,000 on Facebook ads but only generates $2,100 in course sales.
ROAS = ($2,100 ÷ $3,000) × 100
ROAS = 0.7 × 100
ROAS = 70%
This campaign is losing money. For every $1 spent, they only got $0.70 back. They lost $900 on this campaign. Time to pause and fix the targeting, creative, or offer.
Example Calculation #3: Break Even Point
A software company spends $8,000 on LinkedIn ads and generates exactly $8,000 in sales.
ROAS = ($8,000 ÷ $8,000) × 100
ROAS = 1 × 100
ROAS = 100%
Breaking even means zero profit after ad costs. You got your ad money back but nothing more. While not losing money is good, this campaign needs optimization to become profitable after operational costs.
The formula works because it shows the multiplier effect of your ad spend. A 500% ROAS means you're multiplying your money by 5. Simple division reveals whether your advertising is a money-making machine or a cash incinerator.
Interpreting Your ROAS Results
Your ROAS number tells a story, but you need context to understand it. A 300% ROAS might be fantastic for one business and terrible for another. Here's how to decode what your results actually mean.
Below 100% — Losing Money
You're spending more on ads than you're earning back. Stop the campaign immediately and diagnose the problem. Check your targeting, ad creative, landing page, and offer. Something is fundamentally broken.
100-400% — Poor Performance
You're getting your ad money back plus some profit, but it's likely not enough after product costs, shipping, and overhead. E-commerce businesses typically need at least 400% ROAS to be profitable. Determine exactly what revenue you need to cover all costs with our break-even calculator.
Action: Optimize your campaigns. Test new audiences, improve your ad creative, or raise prices. This range is survivable short-term but unsustainable long-term.
400-800% — Average Performance
You're in profitable territory after most operational costs. Your ads are working, but there's room to improve. This is where many successful e-commerce businesses operate.
Action: Keep tracking this metric weekly. Look for opportunities to scale winning campaigns and cut underperformers. Test new channels or ad formats.
800-1200% — Good Performance
Strong performance. You're making significant profit after all costs. These campaigns deserve more budget allocation. Scale them carefully to maintain performance.
Action: Document what's working. Replicate successful elements across other campaigns. Consider increasing daily budgets by 20-30% while monitoring performance closely.
Above 1200% — Excellent Performance
Exceptional results. You're earning $12+ for every $1 spent. This level of performance is rare and usually indicates you've found a winning combination of offer, audience, and creative.
Action: Scale aggressively but cautiously. Test similar audiences, increase budgets gradually, and prepare for performance to moderate as you scale. Protect this winning formula.
Factors That Affect Your ROAS
Your ROAS doesn't exist in a vacuum. Multiple factors influence whether you hit 200% or 2000%:
- •Industry and Product Type: SaaS companies often see higher ROAS than physical product businesses because of lower fulfillment costs. A $50 software license has better margins than a $50 t-shirt.
- •Brand Recognition: Established brands convert better than unknown startups. If you're new, expect lower ROAS initially as you build trust and awareness.
- •Ad Platform and Competition: Google Search ads usually deliver higher ROAS than display ads because of intent-driven traffic. Competitive industries like insurance or legal services have lower ROAS due to high CPCs.
- •Customer Lifetime Value: If customers buy multiple times, your initial ROAS might look low but lifetime value makes it profitable. Don't judge a campaign solely on first-purchase ROAS.
- •Attribution Model: Last-click attribution might show lower ROAS than multi-touch models that credit all touchpoints in the customer journey.
- •Seasonality: Q4 holiday season typically delivers higher ROAS than January. Adjust your expectations based on time of year.
When to Consult a Professional
If your ROAS is consistently below 200% despite optimization efforts, hire a marketing consultant or agency. They can audit your campaigns and identify issues you're missing.
Also consider professional help if you're spending more than $10,000 monthly on ads. Expert optimization at that budget level pays for itself quickly through improved ROAS.
Financial Implications of Your ROAS
ROAS numbers look impressive on dashboards, but they only matter if you're making actual profit. Here's what different ROAS levels mean for your business finances in the real world.
The Hidden Costs Behind Your ROAS
Even a 400% ROAS can lose money if your costs are high. Every business has additional expenses beyond ad spend:
- •Cost of Goods Sold (COGS): Manufacturing, inventory, or service delivery costs eat 30-70% of revenue for most businesses.
- •Transaction Fees: Payment processors charge 2-3% per transaction. Selling on marketplaces adds another 10-15%.
- •Shipping and Fulfillment: Free shipping isn't free. You're paying $5-15 per order on average.
- •Customer Service: Returns, refunds, and support inquiries cost money.
- •Overhead: Software subscriptions, rent, salaries, and other operating expenses.
Calculate your product profit margins accurately with our margin calculator to see what ROAS you truly need for profitability.
Real Example: The Profit Reality
A clothing brand spends $5,000 on ads and generates $20,000 in sales (400% ROAS). Looks great, right?
Revenue: $20,000
Ad Spend: -$5,000
COGS (50%): -$10,000
Transaction Fees (3%): -$600
Shipping: -$2,000
Returns (10%): -$2,000
Net Profit: $400
That 400% ROAS only delivered 2% profit margin. You'd need 800%+ ROAS to make meaningful profit in this scenario.
Long-Term Business Impact
Low ROAS campaigns create a vicious cycle. You're spending cash to barely break even, which means:
- →No money to reinvest in better marketing
- →Can't hire help to optimize campaigns
- →Unable to outspend competitors
- →Cash flow problems limiting growth
High ROAS campaigns do the opposite. They generate surplus cash you can pour back into scaling, testing new channels, and dominating your market. Focus on profitable ROAS, not just positive ROAS.
Limitations of ROAS and When It Fails You
ROAS is powerful but it's not perfect. Here's what this metric can't tell you—and when you shouldn't rely on it alone.
What ROAS Doesn't Measure
- ✗Profitability: You can have 300% ROAS and still lose money after product costs and expenses.
- ✗Customer Lifetime Value: Acquiring a customer who buys once vs. 10 times has the same initial ROAS.
- ✗Brand Building: Awareness campaigns might show low ROAS but build long-term brand equity.
- ✗Attribution Accuracy: Multi-touch customer journeys make it hard to credit the right ad.
- ✗Market Saturation: High ROAS might mean you're only reaching easy audiences, not growing.
When ROAS Misleads You
Short Attribution Windows: If you track ROAS over 7 days but customers take 30 days to buy, you'll undercount revenue. Your actual ROAS might be double what you're seeing.
New vs Returning Customers: Lumping all sales together hides whether you're acquiring new customers or just retargeting existing ones. A 600% ROAS from retargeting ads isn't as valuable as 600% ROAS from cold traffic.
Platform Reporting Issues: Facebook, Google, and other platforms all claim credit for the same sale. Your combined ROAS might add up to 800% when real ROAS is 300%.
Doesn't Work For: Brand awareness campaigns, PR initiatives, organic social media, SEO investments, or any marketing that doesn't directly drive immediate sales. These channels build value over time but show terrible ROAS initially.
Who ROAS Doesn't Work For
- •B2B companies with long sales cycles (6-12 months from ad to sale)
- •Businesses with offline sales that can't be tracked digitally
- •Apps with free trials where revenue comes later
- •Non-profits tracking donations instead of revenue
What to Use Alongside ROAS
Smart marketers track multiple metrics:
- ✓Customer Acquisition Cost (CAC): How much it costs to acquire one customer
- ✓Customer Lifetime Value (CLV): Total profit from a customer over their lifetime
- ✓Profit Margin: Actual profit after all costs, not just ad costs
- ✓Conversion Rate: Percentage of ad clicks that turn into sales
Related Marketing Metrics and When to Use Them
ROAS is one piece of the marketing puzzle. Understanding related metrics helps you make smarter decisions about where to invest your advertising budget.
ROI (Return on Investment)
Formula: (Profit - Investment) ÷ Investment × 100
ROI considers total profit after ALL expenses, not just ad costs. Use ROI when evaluating overall business profitability. A 300% ROAS might only be 50% ROI after product costs, shipping, and overhead.
CPA (Cost Per Acquisition)
Formula: Total Ad Spend ÷ Number of Conversions
CPA tells you how much you pay to acquire one customer. If your CPA is $50 and average order value is $100, you're on track for 200% ROAS. Lower CPA is better.
CLV/CAC Ratio (Customer Lifetime Value to Customer Acquisition Cost)
Formula: Customer Lifetime Value ÷ Customer Acquisition Cost
This ratio matters more than ROAS for subscription businesses. A 3:1 ratio or higher means you're acquiring customers profitably. Lower ratios suggest you're paying too much for customers who don't stick around.
POAS (Profit on Ad Spend)
Formula: (Profit from Ads ÷ Ad Spend) × 100
POAS is more accurate than ROAS because it uses profit instead of revenue. A product with $100 sale price and $30 profit margin will show different POAS vs ROAS. Track both to see the full picture.
Use ROAS for quick campaign performance checks. Use ROI and POAS for profitability analysis. Use CAC and CLV for long-term business health. The best marketers track all of these metrics together.
Frequently Asked Questions
What's a good ROAS for e-commerce businesses?
Most profitable e-commerce businesses aim for 400-800% ROAS minimum. If you sell physical products with 50% margins, you need at least 400% ROAS to break even after all costs. High-margin digital products can be profitable at 200-300% ROAS. The answer depends on your specific costs and margins.
How often should I calculate ROAS?
Check ROAS daily for active campaigns to catch problems early. Do deeper weekly analysis to identify trends. Review monthly to evaluate overall marketing performance and budget allocation. Don't obsess over daily fluctuations—focus on weekly and monthly trends.
Why is my ROAS different from what my ad platform shows?
Ad platforms use different attribution models and tracking windows. Facebook might claim a sale that happened 28 days after someone saw your ad, while Google uses 7 days. They also can't track offline sales or cross-device purchases perfectly. Always verify platform ROAS against your actual revenue data.
Can I use ROAS for brand awareness campaigns?
No, ROAS doesn't work for brand awareness. These campaigns build recognition that drives sales later, but they won't show immediate revenue. Track metrics like reach, impressions, and brand lift surveys instead. Judge awareness campaigns on long-term impact, not short-term ROAS.
What affects Return on Ad Spend the most?
Ad targeting and offer quality matter most. You can have amazing creative but if you target the wrong audience, ROAS will tank. Similarly, a weak offer won't convert even with perfect targeting. Product price point also affects ROAS—higher prices generally mean higher ROAS if conversion rates stay similar.
Should I pause campaigns with low ROAS immediately?
Give new campaigns 7-14 days to optimize before judging ROAS. Ad platforms need data to find the right audience. If ROAS is below 100% after two weeks with decent spend, pause and diagnose the issue. For established campaigns, pause immediately if ROAS drops below break-even for 3+ consecutive days.
How do I improve my Return on Ad Spend?
Test different audiences, improve your landing page conversion rate, increase average order value with bundles or upsells, and refine ad creative. Small improvements compound. Raising your conversion rate from 2% to 3% increases ROAS by 50%. Focus on the biggest bottlenecks first.
Is 200% ROAS profitable?
Usually no. At 200% ROAS, you're earning $2 for every $1 spent on ads. After product costs (typically 40-60% of revenue), shipping, transaction fees, and overhead, you're likely breaking even or losing money. Most businesses need 400%+ ROAS to be profitable. Calculate your specific break-even ROAS based on your margins.