ROAS Calculator
From ad revenue and ad spend, compute ROAS: revenue ÷ ad spend, how many dollars of revenue each ad dollar brings.
Input Data
Results
At a glance:ROAS shows revenue per dollar of ad spend. ROAS = ad revenue ÷ ad spend. A value above 1 brings in more revenue than it costs in ads, but profitability also depends on the margin after the ad.
Formula
ROAS = ad revenue ÷ ad spend.
$$\text{ROAS} = \dfrac{\text{Revenue from Ads}}{\text{Ad Spend}}$$$$\text{Break-even ROAS} = \dfrac{1}{\text{Gross Margin}}$$How to Use
- Enter the ad-driven revenue.
- Enter the ad spend.
- Read the ROAS.
FAQ
What is the difference between ROAS and ROI?
ROAS divides revenue by ad spend — how many dollars of revenue each ad dollar brings. ROI divides profit by the investment — the net return. ROAS is intuitive and used for real-time ad optimisation, but because it ignores costs, a high ROAS does not guarantee profit; judge it together with the gross margin.
How high does ROAS need to be to be worthwhile?
At least above 1 (100%) so revenue covers the ad spend, but to actually make money it must also cover product cost and operating expenses. In practice, derive the break-even ROAS from the gross margin: at a 25% margin, ROAS must be about 4 to break even, so many advertisers target 4 or higher.
Which revenue should I count?
Count only the revenue attributable to the ad, usually from tracking codes, promo codes or the platform's attribution report. Including organic sales not driven by the ad overstates ROAS. With multiple channels, watch the attribution model to avoid double-counting the same sale.
What is the difference between ROAS and ROI, and which better reflects true profitability?
Both measure input-output return, but their numerators differ and they sit at different levels. ROAS's numerator is revenue — 'how many dollars of turnover per ad dollar' (ad revenue ÷ ad spend). Because it ignores all costs, it is intuitive and easy to obtain (the platform attribution report gives it), ideal for real-time ad optimisation — comparing which ad set, audience or creative returns more revenue to shift budget fast. ROI's numerator is profit (net) — 'how much net earned per dollar invested' ((profit − investment) ÷ investment), already net of product cost and operating expenses, so it is closer to true earning power but needs full cost data. The key difference: high ROAS does not mean high ROI (not truly profitable). A 5x ROAS ad may look great, but if the gross margin is thin and overhead heavy, ROI can be negative after all costs. So: use ROAS for quick ad-level optimisation and comparison, derive the break-even ROAS from the gross margin as a pass mark, and periodically use ROI to check overall real profitability. ROAS is a handy real-time steering wheel; ROI is the final profit-and-loss report — use both so a pretty ROAS does not mislead you.
What ROAS target should I set, and how do I compute the revenue?
On the target: there is no universal number; derive the break-even ROAS from the gross margin and add a safety margin. Step 1: break-even ROAS = 1 ÷ gross margin — the minimum ROAS where ad spend is just covered by gross profit. At a 25% margin, break-even ROAS = 4; at 50% margin, only 2. The lower the margin, the higher the ROAS target needed. Step 2: because break-even counts only ad spend and not operating costs (staff, rent, platform fees), the actual target ROAS should be above break-even to leave profit room — which is why many set 3, 4 or higher. On the revenue: only count revenue attributable to the ad, via UTM codes, dedicated promo codes or the platform report. A common error is including organic sales in ad revenue, which badly overstates ROAS. Also mind the attribution model across channels (last-click vs multi-touch) to avoid the same sale being counted by several channels. In short, set the ROAS target by margin with operating-profit room, and count revenue strictly by attribution without double-counting.
Related Tools
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.