What the ROAS Calculator does
This ROAS calculator divides the revenue your ads brought in by what you spent on them, then answers the more useful question: is that ROAS actually profitable for your margin? It works out the break-even ROAS from your gross margin, the profit left after ad cost, and the ROAS you need to hit a profit target, for each channel and blended across all of them.
A 4x ROAS can be excellent for a business with 50% margins and a steady loss for one with 20%. The number only means something next to your margin, which is why the calculator asks for it first.
How to use it
- Enter your gross margin before advertising: revenue minus the cost of the goods, shipping, payment fees and fulfilment, as a percentage of revenue.
- Enter the share of revenue you want left as profit after paying for the ads. Zero gives you the plain break-even point.
- List each channel on its own line with its ad spend and the revenue attributed to it. Add a fourth number if one channel sells a product mix with a different margin.
- Read the blended ROAS, the break-even and target ROAS, and the profit after ads. Channels below break-even are marked red in the chart and flagged above it.
- Copy the summary or download the channel table as CSV for a report.
Reading the results
ROAS is revenue divided by ad spend. It is shown as a multiple (4.5x); some platforms show the same figure as a percentage (450%).
Break-even ROAS is 1 divided by your margin. At a 40% margin each unit of revenue leaves 0.40 of gross profit, so you need 2.5 units of revenue per unit of ad spend just to pay for the ads.
The blended ROAS is total revenue over total spend. It is not the average of the channel ROAS figures, because a large channel counts for more than a small one.
Profit after ads is gross profit minus ad spend. It is not net profit: rent, salaries, software and other fixed costs still come out of it.
Worked example: an online shop with a 40% margin
A shop with a 40% gross margin spent 4,200 on Google Search (revenue 18,900), 3,100 on Meta (revenue 8,680) and 1,200 on TikTok (revenue 2,400).
Search returns 18,900 / 4,200 = 4.5x, Meta 8,680 / 3,100 = 2.8x and TikTok 2,400 / 1,200 = 2.0x. Break-even is 1 / 0.40 = 2.5x, so TikTok is losing money: its 2,400 of revenue leaves 960 of gross profit against 1,200 of spend, a loss of 240.
Blended, the shop spent 8,500 and took 29,980, a ROAS of 3.53x. Gross profit is 11,992 and profit after ads is 3,492. To keep 10% of revenue as profit after ads, it needs 1 / (0.40 - 0.10) = 3.33x - which Search meets, Meta misses and the blend just clears.
Formulas and scoring rules
- ROAS
ROAS = attributed revenue / ad spendShown to two decimals as a multiple. Undefined when spend is zero.- Break-even ROAS
break-even ROAS = 1 / gross marginGross margin as a fraction, before ad cost.- Profit after ads
profit = revenue x margin - ad spend- ROI on ad spend
ROI = (revenue x margin - ad spend) / ad spend- Target ROAS
target ROAS = 1 / (margin - target profit share)From revenue x margin - spend = target x revenue. Unreachable when the target is at or above the margin.- Blended ROAS
blended ROAS = sum of revenue / sum of spendA spend-weighted figure, not the mean of the channel ratios.
ROAS versus ROI
ROAS measures revenue per unit of ad spend; ROI measures profit per unit of ad spend. They answer different questions. ROAS is quick to read from an ad platform, which is why it is popular, but it ignores the cost of what you sold. ROI includes that cost, so it tells you whether the spend made money.
The two meet at break-even: a channel exactly at the break-even ROAS has an ROI of zero. The calculator shows both so that a high ROAS on a thin-margin product does not look better than it is.
Attribution changes the answer
The revenue you enter is whatever your ad platform or analytics attributes to each channel, and platforms tend to credit themselves generously. A purchase that followed a Meta ad and a Google search may be counted by both. Summing platform-reported revenue can therefore exceed your real sales. Where you can, use one attribution source for every channel, and check the blended total against the revenue in your books.
Limitations: what the result does not prove
- It uses the revenue you enter; it cannot tell whether the ads caused that revenue or merely preceded sales that would have happened anyway.
- Profit after ads is a gross figure. Fixed costs, returns you did not include in the margin, and taxes are not deducted.
- A single margin assumes every channel sells the same mix. Use the per-line override where a channel sells mostly high- or low-margin products.
- ROAS over a short window undervalues channels that bring repeat customers. Customer lifetime value is a different calculation.
Privacy: where your data goes
Everything you paste, type or drop is processed in this browser tab. It is not uploaded, logged, stored or sent to analytics. Session recording and tag-manager scripts are switched off on this page.
Standards and sources
Frequently asked questions
What is a good ROAS?
There is no universal good ROAS. A good ROAS is one above your break-even ROAS, which is 1 divided by your gross margin: 2.5x at a 40% margin, 5x at 20%. Anything above your target ROAS also meets your profit goal. Industry averages ignore your costs, so they cannot tell you whether you make money.
How do I calculate break-even ROAS?
Divide 1 by your gross margin before ad costs. A product sold for 100 with 60 of product, shipping and fee costs has a 40% margin, so the break-even ROAS is 1 / 0.4 = 2.5. Below that, each sale driven by ads loses money once the ad is paid for.
Is ROAS the same as ROI?
No. ROAS is revenue divided by ad spend; ROI is profit divided by ad spend. A 3x ROAS at a 25% margin means each 1 of ad spend brought 3 of revenue but only 0.75 of gross profit, an ROI of -25%. The calculator shows both side by side.
Why is my blended ROAS not the average of my channels?
Blended ROAS divides total revenue by total spend, so each channel counts in proportion to what you spent on it. Averaging a 6x channel with 100 of spend and a 2x channel with 10,000 of spend would suggest 4x, but the real blended return is close to 2x.
What should I include in gross margin for ROAS?
Include every cost that rises with each order: product or cost of goods, packaging, outbound shipping you pay, payment processing and marketplace fees, and an allowance for returns. Leave out ad spend itself and fixed overheads such as rent or salaries, which do not change with one more order.
What target ROAS should I set in Google Ads or Meta?
Use the target ROAS this calculator gives for the profit share you want, then enter it in the platform's format: Google Ads uses a percentage, so 3.33x becomes 333%. Start a little below it if the campaign is new, because bid strategies need conversions to learn and a very high target can starve them of volume.
Last reviewed by the A2Z.Tools team against the sources listed above.
