What is ROAS?
ROAS stands for Return On Ad Spend. It measures how much revenue you earned for every unit of currency you spent on advertising.
Spend 5,000 on a campaign and generate 20,000 in sales, and your ROAS is 4 — usually written 4x or 400%. Every 1 you spent returned 4.
Why media buyers live by it ROAS is the fastest read on campaign health. Because it is a ratio rather than an absolute number, you can compare it across platforms (Meta, Google, TikTok) and across campaigns inside the same account.
ROAS vs ROI — the difference that costs money
Confusing these two is the most expensive mistake in paid media. They are not the same:
- ROAS compares revenue to ad spend only. It ignores cost of goods, shipping, payment fees and salaries.
- ROI measures net profit against your total costs, so it tells you whether you actually made money.
This is why a campaign at 3x ROAS can be losing money if your gross margin is only 25%. The calculator above reports both figures side by side so you never fall into that trap.
Break-even ROAS — the number that matters most
Break-even ROAS is the minimum return you need in order not to lose money. It depends entirely on your gross margin:
With a 40% margin (0.40), break-even is 1 ÷ 0.40 = 2.5x. Anything below 2.5x loses money; anything above it turns a profit.
| Gross margin | Break-even ROAS | Notes |
|---|---|---|
| 20% | 5.00x | Thin margin — demands exceptional performance |
| 30% | 3.33x | Common in ecommerce |
| 40% | 2.50x | Healthy margin |
| 50% | 2.00x | Comfortable room to scale |
| 70% | 1.43x | Digital products and services |
| 90% | 1.11x | SaaS |
Practical tip Work out break-even before launching, then make it the floor in your automated rules. Cutting ad sets below that number frees more budget than almost any other optimisation.
How to use the calculator
- Pick a tab: actual ROAS, break-even ROAS, or projected revenue from a planned spend.
- Enter revenue and spend from your ad platform dashboard, for the same date range.
- Add your gross margin if you want true ROI and your break-even point.
- Press Calculate and read ROAS, ROI and net profit together.
- Check the chart showing what share of revenue your ad spend consumed.
What counts as a good ROAS?
There is no single right answer — "good" depends on your margin and business model. These are common reference points:
| Type | Typical ROAS | Notes |
|---|---|---|
| General ecommerce | 3x – 5x | Depends on product margin |
| Low-margin goods | 6x+ | Electronics, commodities |
| Digital products | 1.5x – 2.5x | Margin is nearly total |
| New-customer acquisition | 1x – 2x | Judge against lifetime value |
| Retargeting | 6x – 12x | Warm audience |
Mind lifetime value If your product is a subscription or is bought repeatedly, measuring ROAS on the first order makes the campaign look worse than it is. Measure against LTV instead of single-order value.
Common ROAS measurement mistakes
- Comparing across attribution windows: a 7-day click window reports far higher than 1-day. Always compare like with like.
- Trusting platform ROAS alone: Meta and Google will each claim the same conversion, so their combined ROAS can exceed your actual revenue.
- Ignoring margin: a high ROAS on a thin margin can still be a net loss.
- Judging too early: a small conversion sample produces wildly unstable ROAS. Wait for volume before deciding.
- Forgetting returns: subtract refunds from revenue before calculating, especially in fashion.
Frequently asked questions
How do I calculate ROAS?
Divide the revenue generated by a campaign by the amount you spent on it. For example, 20,000 in revenue from 5,000 of spend gives a ROAS of 20000 ÷ 5000 = 4x, or 400%.
What is the difference between ROAS and ROI?
ROAS compares revenue to advertising spend only, while ROI accounts for net profit after all costs including cost of goods. A campaign can show a strong ROAS while ROI is negative if your margin is thin.
What is a good ROAS?
It depends on your profit margin. The practical rule is that any ROAS above your break-even point (1 ÷ gross margin) is profitable. In general ecommerce, 3x to 5x is typical.
How do I calculate break-even ROAS?
Divide 1 by your gross margin expressed as a decimal. At a 40% margin, break-even is 1 ÷ 0.40 = 2.5x, meaning you need at least 2.50 back for every 1.00 spent just to avoid a loss.
Does a 200% ROAS mean I am profitable?
Not necessarily. A 200% ROAS is only 2x. If your gross margin is 30%, break-even is 3.33x, so 2x is actually a loss despite the positive-sounding percentage.
Why does platform ROAS differ from my analytics?
Platforms use different attribution windows and models, and two platforms may each claim the same conversion. Pick one trusted source of truth for decisions — ideally your actual sales data.
Is this calculator free?
Yes, completely free and it runs inside your browser. Your campaign numbers are never sent to a server or stored.
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