What ROAS tells you
ROAS (return on ad spend) is how much revenue each advertising dollar brings back: ROAS = revenue ÷ ad spend. Earn $20,000 from $5,000 of ads and your ROAS is 20,000 ÷ 5,000 = 4x — $4 of revenue for every $1 spent, or 400%. It's the headline metric for judging whether a campaign pays off.
How to use this calculator
Enter the revenue attributed to your ads and the ad spend that produced it. The result shows ROAS as a multiple (e.g. 4x) and a percentage, plus your gross profit over spend and the ROI. Compare campaigns on the same revenue-attribution basis for a fair read. ROAS ignores product costs, so profitability still needs the ROI calculator.
How to read ROAS values
What different returns look like on $5,000 of spend: Whether a given ROAS is enough depends on your gross profit margin.
| Revenue | ROAS | Meaning |
|---|---|---|
| $5,000 | 1x | Break-even on revenue |
| $10,000 | 2x | $2 back per $1 |
| $20,000 | 4x | Strong for many stores |
| $40,000 | 8x | Excellent |
ROAS vs. ROI — break-even is not 1x
ROAS uses revenue, not profit, so a 1x ROAS means you only recovered the ad cost in sales — you likely still lost money once product cost and overhead are counted. Your true break-even ROAS depends on your margin: at a 25% profit margin you need roughly 4x ROAS just to cover the ad spend. ROI, shown here, compares profit to spend instead.
Setting a target ROAS from your margin
Work out the ROAS you actually need: divide 1 by your profit margin. A 50% margin needs about 2x to break even on ads; a 20% margin needs about 5x. Check your product profitability with the margin calculator, and pair ROAS with reach costs from the CPM calculator to see the full picture.
These figures are an estimate for general information only and are not financial advice; consult a qualified professional before making money decisions.
Frequently asked questions
- How do I calculate ROAS?
- Divide revenue from ads by ad spend. $20,000 revenue from $5,000 spend is a ROAS of 4x, meaning $4 earned per $1 spent.
- What is a good ROAS?
- It depends on your margins. Many ecommerce businesses aim for 3–4x or higher, but a thin-margin product may need more just to break even.
- What is the difference between ROAS and ROI?
- ROAS compares revenue to ad spend; ROI compares profit to spend. A 4x ROAS can still be unprofitable if your product and overhead costs are high.
- What ROAS is break-even?
- Not 1x. Because ROAS uses revenue, your real break-even is 1 ÷ profit margin. At a 25% margin that's about 4x ROAS to cover the ad cost.
- How do I express ROAS as a percentage?
- Multiply the ratio by 100. A 4x ROAS is 400%.