ROAS Calculator

What is ROAS?

ROAS stands for return on ad spend. It tells you how much revenue you got back for every unit of currency you put into an ad campaign. If you spent 10,000 on ads and those ads brought in 40,000 in sales, your ROAS is 4, or "4x" for short.

That's really all it is. It's a ratio, not a percentage, and it only looks at revenue, not profit. That second part trips a lot of people up, and we'll get to why it matters further down.

How to calculate ROAS

The formula is short:

ROAS = Revenue from ads ÷ Amount spent on ads

Say you ran a campaign for a month. You spent 50,000 on it, and you can see from your tracking that those ads directly led to 200,000 in sales. Divide 200,000 by 50,000 and you get 4. Your ROAS for that campaign was 4x.

A worked example

Let's do one more, with messier numbers, since real campaigns rarely come out even. You spend 73,500 on Google Ads this month. Your conversion tracking shows 312,800 in revenue from people who clicked those ads and bought. 312,800 divided by 73,500 is about 4.26. So your ROAS is 4.26x, meaning for every 1 you spent, you got back roughly 4.26 in sales.

The calculator above does this math for you, and it also works out your break-even point and your profit after spend, which takes one more step than the basic formula.

What counts as a good ROAS?

There's no single number that applies to every business, and anyone who gives you one without asking about your margins is guessing. A furniture store with a 60% profit margin can be comfortably profitable at a 2x ROAS. A grocery delivery business running on a 5% margin would lose money at that same 2x.

Break-even ROAS matters more than a benchmark

Your break-even ROAS is the point where your ad spend is fully covered by your profit, with nothing left over. You work it out as 100 divided by your profit margin percentage. At a 40% margin, that's 100 divided by 40, or 2.5x. Anything above 2.5x is profit. Anything below it, and you're paying to lose money, even though the ROAS number might still look fine on its own.

This is the main reason we built the break-even figure into the calculator above instead of just showing a plain ROAS number.

ROAS vs ROI

People use these two interchangeably, and they shouldn't. ROAS looks only at revenue against ad spend. ROI looks at actual profit against total cost, including everything else that went into making the sale, like product cost, shipping, and staff time.

You can have a great ROAS and a terrible ROI if your margins are thin or your other costs are high. That's why a 10x ROAS on a product that costs more to make than it sells for is still a losing campaign.

Mistakes we see most often

The biggest one is treating ROAS as the whole story and ignoring margin completely. A close second is counting the wrong revenue. If your tracking is attributing sales to ads that didn't actually cause them, your ROAS will look better than your business actually is, right up until the ad spend runs out and sales drop with it.

Another common one is judging a campaign too early. A new campaign needs time to gather data and find its audience. Looking at day three numbers and calling it a failure usually means you killed something that was about to work.

How to actually raise your ROAS

Start with your targeting. Ads shown to the wrong audience waste spend no matter how good the creative is. After that, look at your landing page. A strong ad sending traffic to a slow or confusing page will always underperform, since the ad's job ends the moment someone clicks.

Test your ad creative and offers against each other rather than guessing which one works. And check your conversion tracking is actually accurate. Half the "ROAS problems" we're brought in to fix turn out to be tracking problems first.