ROAS Calculator — Return on Ad Spend
Calculate return on ad spend (ROAS) and determine the minimum ROAS needed to break even given your gross margin.
How to use this tool
- Enter revenue attributed to ads, total ad spend and gross margin in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your roas and the full breakdown beneath it.
ROAS measures how much revenue you earn for every dollar spent on advertising. Unlike ROI, ROAS is a gross revenue ratio — you still need to account for cost of goods sold to determine profitability.
Formula
ROAS = Ad Revenue ÷ Ad Spend
Break-even ROAS = 100 ÷ Gross Margin (%)
A campaign is profitable when ROAS ≥ Break-even ROAS.
How it works
This calculator computes ROAS by dividing ad-attributed revenue by total ad spend, then derives the break-even ROAS — the minimum return needed to cover the cost of goods — by inverting the gross margin percentage. It then flags whether the campaign is profitable.
ROAS is a revenue metric, not a profit metric; a campaign can show a high ROAS and still lose money if margins are thin. The break-even ROAS calculation assumes all ad-attributed revenue carries the same gross margin, which may not hold if your product mix varies by channel.
Worked example
Worked example
- Ad revenue = $5,000; ad spend = $1,000.
- ROAS = $5,000 ÷ $1,000 = 5x.
- Gross margin = 50%; break-even ROAS = 100 ÷ 50 = 2x.
- 5x ≥ 2x, so the campaign is profitable.
ROAS = 5x; break-even ROAS = 2x; campaign is profitable.
Key terms
- ROAS (Return on Ad Spend)
- Revenue generated for every dollar spent on advertising; calculated as ad revenue divided by ad spend.
- Break-even ROAS
- The minimum ROAS at which ad revenue exactly covers the cost of goods sold; equal to 1 ÷ gross margin (as a decimal).
- Gross Margin
- Revenue minus cost of goods sold, expressed as a percentage of revenue; represents the share of each revenue dollar available to cover operating costs.
- Ad Attribution
- The process of crediting revenue to a specific ad or campaign, typically via last-click, first-click, or data-driven attribution models.
- ROAS vs. ROI
- ROAS measures revenue return on ad spend only; ROI (return on investment) accounts for all costs including COGS and overhead, making ROI a more complete profitability measure.
Frequently asked questions
- What is a good ROAS?
- A common benchmark is 4:1 ($4 revenue per $1 spent), but the required ROAS depends on your gross margin. At 25% margin you need ROAS ≥ 4x to break even; at 50% margin you need ROAS ≥ 2x.
- What is the difference between ROAS and ROI?
- ROAS = revenue / ad spend (gross ratio). ROI = (revenue - cost) / cost × 100% (net return). ROAS ignores the cost of goods, while ROI accounts for it. Use ROAS to optimise campaigns; use ROI to assess true profitability.