What is ROAS?
ROAS (return on ad spend) is the revenue your ads generate for every dollar you spend on them. A ROAS of 3.5x means $3.50 in revenue for each $1 of ad spend.
Break-even ROAS: the number that actually matters
A "good" ROAS is meaningless without your margin. If you keep 40 cents of every sales dollar after product and fulfilment costs, every $1 of ads needs to bring in $2.50 just to break even.
| Gross margin | Break-even ROAS | Typical business |
|---|---|---|
| 20% | 5.0x | Electronics, resellers |
| 30% | 3.3x | General e-commerce |
| 50% | 2.0x | Apparel, private label |
| 70% | 1.4x | Cosmetics, supplements |
| 90% | 1.1x | SaaS, digital products, courses |
How to use this calculator
- Enter the ad spend for the period (campaign, week or month).
- Enter the revenue attributed to those ads in your ad platform or analytics.
- Enter your gross margin to get break-even ROAS and true profit after ads.
If your ROAS is below break-even, every sale is costing you money - even when the dashboard looks "green". Either lower acquisition cost, raise average order value, or improve margin.
ROAS vs. ROI
ROAS only looks at revenue versus ad spend. ROI subtracts all costs (product, fees, staff, tools) and compares profit to investment. A campaign can have a 3x ROAS and still a negative ROI. Use ROAS to steer campaigns day-to-day and ROI to judge the business.
Frequently asked questions
What is a good ROAS?
A common rule of thumb is 4x, but the real answer depends on margin. A 90%-margin digital product is profitable at 1.2x, while a 20%-margin reseller needs more than 5x.
Is ROAS the same as ROI?
No. ROAS compares revenue to ad spend only. ROI compares profit to the total investment including product and operating costs.
How do I calculate ROAS in percent?
Multiply ROAS by 100. A 3.5x ROAS is 350%.