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ROAS calculator

ROAS tells you how many dollars of sales came back for every dollar of ads, but the number is meaningless until you know your own break-even point. Add your ad spend, the sales it generated, your product margin and per-sale fees, and the calculator returns your ROAS, the ROAS you need just to break even and the profit or loss after ads. The table below shows profit at other ROAS levels, which helps you set a target you can actually hit.

Start from
Your ads
Your margins

Your ROAS next to the two lines that matter

Actual ROAS, the point where ads stop losing money and the level that reaches your profit goal.

Profit at higher and lower returns

Same ad spend and margins, different returns. Any row under break-even loses money on every dollar of ads.

ROASRevenueContributionProfit after adsProfit per ad dollar

How ROAS and its break-even are calculated

ROAS itself is just sales divided by ad spend. The useful bit is comparing it with your break-even, which comes from your margins.

Contribution is what a sale leaves once the product and the fees on that sale are paid for, before any advertising.

  1. ROAS

    Sales divided by ad spend.

    ROAS = revenue ÷ ad spend

  2. Contribution margin

    The part of each sales dollar left after product cost and fees.

    contribution margin = gross margin − fees

  3. Break-even ROAS

    The ROAS where contribution exactly covers the ads.

    break-even ROAS = 1 ÷ contribution margin

  4. Target ROAS

    Leaves you the share of contribution you want to keep as profit.

    target ROAS = break-even ÷ (1 − profit kept)

  5. Profit after advertising

    Contribution less ad spend and any management fee.

    profit = revenue × contribution margin − spend − fee

Return on ad spend FAQ

What is the formula for ROAS?

Sales from your ads divided by what the ads cost. $5,000 of sales from $1,000 of ads is a ROAS of 5, also written 5x or 500 percent. It measures revenue, not profit, which is why a break-even ROAS is needed alongside it.

What is break-even ROAS?

The ROAS at which ad spend uses up all the profit from the sales it creates. It equals 1 divided by your margin after product cost and fees, so a 40 percent margin gives a break-even of 2.5. Anything below that and each ad dollar loses money.

What ROAS should I aim for?

There is no universal number. With 80 percent margins a ROAS of 2 is profitable, while with 25 percent margins you need at least 4 just to break even. Measure yourself against your own break-even, not against another industry's average.

How is ROAS different from ROI?

ROAS sets revenue against ad spend only. ROI sets profit against everything invested, including product costs, fees and staff time. A campaign can show a healthy ROAS and still lose money once all of that is counted.

Should repeat orders count towards ROAS?

If customers come back, judging an ad on the first order undersells it. Many businesses happily run first-order ROAS close to break-even because later orders bring the profit. Our lead value calculator helps put a figure on lifetime value.

Why does the ad platform report a different ROAS?

Platforms use their own attribution windows and often claim sales that would have happened anyway. Your store's own sales data, or a blended ROAS of total revenue divided by total ad spend, is a good reality check.

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