Free tool
ROAS calculator
Return on ad spend only means something next to your margin. Enter what you spent, what it sold and what you keep from a sale, and see whether the ads are paying for themselves.
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- Meta, Google, TikTok, Amazon
Margin before ads: what is left of a sale after product cost, fees and shipping, as a percent of the price. The profit margin calculator works it out.
ROAS
0x
ROAS formula and break-even ROAS
ROAS = revenue from ads divided by ad spend. Break-even ROAS = 1 divided by your margin before ads.
A campaign spending $1,000 to sell $4,000 has a ROAS of 4. At a 40% margin that $4,000 leaves $1,600 before ads, so after the $1,000 spend the campaign made $600. Its break-even ROAS is 2.5.
Break-even ROAS by margin
| Margin before ads | Break-even ROAS | Break-even ACoS |
|---|---|---|
| 20% | 5x | 20% |
| 30% | 3.33x | 30% |
| 40% | 2.5x | 40% |
| 50% | 2x | 50% |
| 60% | 1.67x | 60% |
| 70% | 1.43x | 70% |
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Frequently asked questions
How do I calculate ROAS?
Divide the revenue your ads brought in by what you spent on them. $4,000 of sales from $1,000 of ad spend is a ROAS of 4, often written 4x or 400%.
What is a good ROAS?
Any ROAS above your break-even ROAS is profitable, and that depends entirely on your margin. A business keeping 40% of every sale before ads breaks even at a ROAS of 2.5; one keeping 20% needs 5. A "good ROAS of 4" rule of thumb is meaningless without your margin.
What is break-even ROAS?
One divided by your profit margin before ad spend. At a 40% margin, 1 / 0.40 = 2.5: below that, every ad sale loses money; above it, ads are profitable.
Is ROAS the same as ROI?
No. ROAS compares revenue with ad spend and ignores the cost of the product. ROI compares profit with spend. A campaign can show a ROAS of 3 and still lose money if the margin is under 33%.
How does ROAS relate to ACoS?
They are inverses. ACoS, the measure Amazon uses, is ad spend divided by ad sales; ROAS is ad sales divided by ad spend. A ROAS of 4 is an ACoS of 25%.