ROAS Calculator

ROAS (Return on Ad Spend) measures how much revenue is generated for every dollar spent on advertising.
It is the primary performance metric for paid media campaigns.

Core ROAS formula:

ROAS = Revenue Generated / Ad Spend

ROAS is expressed as a ratio (e.g., 4.0×) or equivalently as a percentage (400%).

Worked example:
Ad spend: $2,500. Revenue attributed to those ads: $10,000.
ROAS = $10,000 / $2,500 = 4.0×
This means every $1 spent returned $4 in revenue.

Break-even ROAS:

Break-Even ROAS = 1 / Gross Margin

If your product has a 35% gross margin:
Break-Even ROAS = 1 / 0.35 = 2.86×
You must achieve at least 2.86× ROAS before the ad is profitable.

Profit-based ROAS target:

Target ROAS = 1 / (Gross Margin − Desired Profit Margin)

Break-even leaves nothing over. Say you want every sale to keep 10% of its revenue as profit after the ad is paid for. On the same 35% gross margin product the target is 1 / (0.35 − 0.10) = 4.0×, well above the 2.86× that merely breaks even.

ROAS benchmarks by industry (approximate, 2025):

ROAS vs. ROI:

ROAS measures revenue return on ad spend only.
ROI factors in all costs including COGS, overhead, and fulfillment:
ROI = (Revenue − Total Costs) / Total Costs × 100

A campaign can have a high ROAS but negative ROI if product margins are thin.
Always analyze both metrics together for a complete picture.