Return on Ad Spend (ROAS) Calculator

ROAS is the revenue you earn for every unit of currency spent on advertising, calculated as revenue divided by ad spend. A ROAS of 4, written 4:1, means you made four dollars in revenue for every dollar spent on ads.

Divide the revenue attributed to a campaign by the amount you spent on it. For example, $40,000 in revenue from $10,000 of ad spend is a ROAS of 4, or 4:1.

Break-even ROAS is the ROAS at which gross profit from a campaign exactly covers the ad spend, so you neither make nor lose money. It equals 1 divided by your gross margin. At a 25% margin you need a ROAS of 4 to break even; at a 50% margin you only need 2.

It depends on your margins, but a ROAS of around 4:1 is a common healthy target for many ecommerce businesses. The most useful comparison is your ROAS against your own break-even ROAS rather than a fixed number.

ROAS compares revenue to ad spend only, so it is a gross top-line measure. ROI compares profit to total cost, including product costs and other expenses. ROI is always lower than ROAS once you account for the cost of goods sold.