ROAS calculator

Return on ad spend is revenue divided by spend: $4,000 of sales from $1,000 of spend is a ROAS of 4, or 400%. Type any two of revenue, spend and ROAS and the third is filled in; add your margin and the calculator gives the break-even ROAS and the profit left after the campaign.

Under it: the formula, worked examples, what counts as good and why the answer is your margin, ROAS against ROI, how to raise one, and what a fixed-price position costs on a board where every amount is public.

Revenue from the campaignSales the campaign can be credited with, before any costs.Ad spendWhat the campaign cost to run.ROASSolvedRevenue for every dollar spent, as a multiple.

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Gross marginWhat is left of a dollar of revenue after the cost of the thing sold. Retail sits near 40, software near 80.

ROAS4x

Every dollar in came back as $4.00 of revenue. That is 400% of spend, before margin.

Break-even ROAS: 2.5xat a 40% margin, below this the campaign loses money
Profit after the spend: $600.00gross profit on the revenue, minus what it cost to get

Where that sitsIn the Break even to thin range

Losing money on most margins0.5x to 2x

Break even to thin2x to 4x

The usual target4x to 8x

Unusually good8x to 20x

Where a ROAS usually lands. What counts as good depends on your margin, which the line below works out.

What ROAS is

Return on ad spend is the revenue a campaign produced for every dollar it cost. It is written as a multiple (4x) or a percentage (400%), and the two say the same thing. It is the metric of any campaign whose result is a sale with a price on it, which is why it is the number ecommerce reads first.

It is a gross figure. Revenue is before the cost of the thing sold, before shipping, before returns and before the platform fee, so a ROAS on its own does not say whether the campaign made money. That takes the margin, which is the second half of the calculator above.

The ROAS formula, and the break-even ROAS

ROAS = revenue from the campaign / ad spend.

Revenue = spend x ROAS. What a budget should bring in at a known return.
Spend = revenue / ROAS. What it should cost to hit a revenue target.

Break-even ROAS = 1 / gross margin. At a 40% margin every dollar of revenue carries forty cents of profit, so it takes $2.50 of revenue to pay back $1 of spend: the break-even ROAS is 2.5. At an 80% margin it is 1.25; at a 20% margin it is 5. Below the break-even figure a campaign loses money however impressive the multiple looks.

Profit after the spend = (revenue x margin) minus spend. This is the line that answers whether the campaign was worth running.

Worked examples

Profit is revenue times margin, minus spend.
Spend	Revenue	ROAS	Margin	Break-even ROAS	Profit after the spend
$1,000	$4,000	4.0x	40%	2.5x	$600
$1,000	$2,500	2.5x	40%	2.5x	$0
$1,000	$8,000	8.0x	40%	2.5x	$2,200
$1,000	$3,000	3.0x	20%	5.0x	-$400
$1,000	$2,000	2.0x	80%	1.25x	$600

The fourth and fifth rows are the argument. A 3x ROAS on a 20% margin loses four hundred dollars; a 2x ROAS on an 80% margin makes six hundred. The multiple that looks better is the campaign that lost money. ROAS without margin is a number without a meaning.

What a good ROAS is

Four to one is the figure most often quoted as a target, and it is a reasonable one for a retailer on a typical margin: comfortably above break-even, with room for returns and overheads. It is the wrong target for almost everybody else.

A business on thin margins, such as grocery or electronics, needs six, eight or ten to make money at all.
A software business on an 80% margin makes money from two, and a subscription business can run below break-even on the first purchase if the customer stays, which is what the CAC calculator is for.
A launch or a brand campaign is not judged on ROAS at all, because the sale it produces is months away and unattributable.

The calculator's benchmark bands are drawn for a typical retail margin. The break-even line under the result is drawn for yours.

ROAS against ROI

ROAS is revenue over spend. ROI is profit over cost, and it counts every cost: the product, the platform fee, the agency, the people. A campaign with a 4x ROAS on a 40% margin has an ROI of 60%: four dollars of revenue is $1.60 of gross profit, minus the dollar it cost, is sixty cents on the dollar.

Use ROAS to compare campaigns and channels against each other, quickly, on a like-for-like basis. Use ROI to decide whether advertising is a better use of the money than the alternatives.

How to raise a ROAS

Raise the order value. A ROAS is revenue over spend, and a bundle or a threshold for free shipping moves the numerator without touching the auction.
Cut the spend that produces no revenue. Most accounts have keywords, placements or audiences that never converted; a ROAS is raised fastest by switching them off.
Count the returns. A ROAS on gross sales flatters a product with a high return rate; count net revenue and the real figure is the one you plan on.
Fix the attribution. A last-click ROAS undercounts the channels that start a purchase and overcounts the ones that finish it, so the campaign with the best ROAS is often the one taking credit for another's work.

A position with a price on it

The panel under the calculator places your spend on the board live. Rank is decided by what each brand paid, so the amount you typed is a position on the ladder right now, and the panel shows the brand holding it today with the impressions and clicks it has earned while it did.

A ROAS on an auction is computed after the fact from a price nobody quoted in advance. Here the price of every position is public before you spend a cent, and the clicks from it are counted on the listing and in Fathom. What those clicks are worth is your revenue figure; the calculator above will take it.

Questions people ask about a roas calculator

How do you calculate ROAS?

Divide the revenue a campaign produced by what it cost. $4,000 of revenue from $1,000 of spend is a ROAS of 4, written 4x or 400%.

What is a good ROAS?

It depends on your margin. Four to one is the usual target for a retailer on a typical margin. A business on thin margins needs eight or ten; a software business on an 80% margin makes money from two. The break-even ROAS is one divided by the gross margin.

What is break-even ROAS?

The ROAS at which a campaign makes no money and loses none: one divided by the gross margin. At a 40% margin it is 2.5; at 25% it is 4; at 80% it is 1.25. Below it, every sale the campaign makes loses money.

Is ROAS the same as ROI?

No. ROAS is revenue divided by ad spend. ROI is profit divided by total cost, and it counts the cost of the goods, the fees and the people. A 4x ROAS on a 40% margin is a 60% ROI.

Is a 3x ROAS good?

On a 40% margin, yes: it is above the 2.5 break-even and leaves $200 of profit on every $1,000 spent. On a 20% margin it loses money, because the break-even is 5x.

How do I calculate ROAS as a percentage?

Multiply the multiple by 100. A ROAS of 4 is 400%; a ROAS of 2.5 is 250%.

What is a good ROAS for Facebook or Google?

The same answer as any channel: above your break-even ROAS, with room to spare. Most reports put average ecommerce ROAS on both platforms between two and four; what is good for your business is decided by your margin, not by the platform.

Should I count returns in ROAS?

Yes, for any figure you plan on. A ROAS on gross sales flatters a product with a high return rate. Count net revenue after refunds and the number is the one you can spend against.

More free tools

CACCalculatorCAC calculatorCost per new customer, LTV to CAC, and how many months it takes to pay back.CPCCalculatorCPC calculatorSpend, clicks or cost per click from the other two, with benchmarks by channel.CPMCalculatorCPM calculatorSpend, impressions or CPM from the other two, with benchmarks by channel.

All of them are on the free tools page. Every one is free, asks for no account, and stores nothing of yours on our side. A listing on The Board is a logo, a line and a link, from $1, and every number on the board is public.