Free ROAS Calculator
Calculate return on ad spend, then see your break-even ROAS, the target ROAS for your desired margin and real profit after costs.
ROAS Calculator: Calculate return on ad spend, then see your break-even ROAS, the target ROAS for your desired margin and real profit after costs. It is free, needs no sign-up and runs in your browser. How to use it: 1) enter revenue from ads and ad spend; 2) add your gross profit margin for break-even and profit; 3) optionally add a target profit margin; 4) click Calculate ROAS and read the profit table. Return on ad spend tells you how much revenue each unit of ad spend brings back. The calculator shows ROAS as a ratio and a percentage, along with ACoS, the inverse measure used on Amazon.
How the ROAS calculator works
Return on ad spend tells you how much revenue each unit of ad spend brings back. The calculator shows ROAS as a ratio and a percentage, along with ACoS, the inverse measure used on Amazon.
Formulas
ROAS = revenue / ad spendROAS % = ROAS x 100ACoS = ad spend / revenueBreak-even ROAS = 1 / gross marginTarget ROAS = 1 / (gross margin - target margin)Profit = revenue x gross margin - ad spend
Example
Revenue of 5,000 from 1,000 of ad spend is a ROAS of 5.00x, or 500 percent. With a 40 percent gross margin, break-even ROAS is 2.50x, gross profit is 2,000 and profit after ads is 1,000. To keep a 10 percent margin after ad spend you need a ROAS of about 3.33x.
Why margin matters
ROAS uses revenue, not profit. A store with thin margins can lose money at a ROAS that looks healthy, while a high margin service can profit at a low ROAS. Adding your margin turns ROAS into a real profit check.
Limitations
The tool uses one average margin and ignores shipping, fees, returns and overheads unless you include them in your margin. It also measures a single period. Customers who buy again later can make a low first-order ROAS worthwhile, so consider lifetime value too.
ROAS Calculator FAQs
What is a good ROAS?
A good ROAS is any figure above your break-even ROAS, which is 1 divided by your gross margin. With a 50 percent margin you break even at 2x. Higher margin businesses can profit at lower ROAS, so set targets from your own margins rather than a general number.
How do I calculate ROAS?
Divide the revenue from your ads by what you spent on them. For example, 5,000 of revenue from 1,000 of ad spend is a ROAS of 5x, which is the same as 500 percent. Add your gross margin to the calculator to see whether that ROAS actually makes a profit.
What is break-even ROAS?
It is the ROAS where profit from sales exactly covers ad spend. Calculate it as 1 divided by your gross profit margin. At a 40 percent margin, break-even ROAS is 2.5x. Below that, ads lose money on the first sale.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend only. ROI compares profit with all costs, such as product costs, fees, tools and staff. ROAS is useful for daily ad decisions, while ROI tells you whether marketing as a whole makes money. Track both for a full picture.
Want our experts to implement these improvements?
Get professional support from Hayyat Networks. Request a free consultation.