Calculate your return on ad spend (ROAS) and, more importantly, your break-even ROAS: the minimum you need before ads start making money. Add your gross margin to see the real profit after ad costs.
$6,000 of sales from $1,500 of ads, with a 40% gross margin:
ROAS
$6,000 ÷ $1,500 = 4.00 : 1
Break-even ROAS
1 ÷ 40% = 2.50 : 1
Gross profit after ads
$6,000 × 40% − $1,500 = $900
The ROAS formula
ROAS = revenue from ads ÷ ad spend
$6,000 of sales from $1,500 of ads is a ROAS of 4 : 1 (also written 4x or 400%). For every dollar spent, the ads brought in four dollars of revenue.
Why ROAS alone can mislead
Revenue is not profit. If your products have a 40% gross margin, $6,000 of sales leaves $2,400 of gross profit. After $1,500 of ads, you keep $900. A business with a 20% margin would lose money at the very same ROAS.
That is why the calculator also shows break-even ROAS:
Break-even ROAS = 1 ÷ gross margin
Gross margin
Break-even ROAS
20%
5.00
25%
4.00
30%
3.33
40%
2.50
50%
2.00
60%
1.67
70%
1.43
80%
1.25
Any ROAS above your break-even number is profitable on a first purchase; anything below it loses money unless customers buy again later.
ROAS vs ROI
ROAS compares revenue to ad spend only.
ROI compares profit to the total investment, including product costs, fees and overheads.
ROAS is the quick daily metric inside ad platforms; ROI tells you whether the business is actually making money.
Using lifetime value
If customers come back and buy again, a first-order ROAS below break-even can still be worthwhile. In that case compare your cost per acquisition with the gross profit a customer brings over time, not just on the first order.
How to improve ROAS
Raise average order value with bundles, order bumps or upsells.
Improve the landing page. A higher conversion rate means more revenue from the same clicks.
Cut audiences and ads below break-even and move budget to those above it.
Retarget warm visitors, who usually convert better than cold audiences.
Frequently asked questions
How do you calculate ROAS?+
Divide the revenue that came from ads by the amount spent on those ads. $6,000 of revenue from $1,500 of spend is a ROAS of 4.
What is a good ROAS?+
Any ROAS above your break-even ROAS. Find it by dividing 1 by your gross margin: at a 40% margin you need at least 2.5.
Is ROAS the same as ROI?+
No. ROAS uses revenue and ad spend only. ROI uses profit and all costs, so it is a stricter measure.
How do I write ROAS as a percentage?+
Multiply the ratio by 100. A ROAS of 4 : 1 is 400%.
Can a campaign with a ROAS above 1 lose money?+
Yes. A ROAS of 2 means $2 of revenue per $1 of ads, but if your margin is 30%, that $2 only leaves $0.60 of gross profit, so you lose $0.40 per dollar spent.
Results are estimates based on the numbers you enter and are for planning only. Platform payouts, ad prices and fees change;
check the official dashboard or provider for your actual figures. Read how we build and check our calculators.