How to calculate ROAS
- Enter your ad spend and the numbers your ad platform reports: impressions, clicks, conversions and revenue. You only need the ones used in the ROAS formula, but adding the rest fills in every other metric too.
- The ROAS card is highlighted at the top, with the formula's inputs underneath.
- Add your gross margin to see whether the campaign is actually profitable after ad costs, and use the planner to estimate the budget for a target.
What ROAS means
ROAS, return on ad spend, measures how much revenue each unit of ad spend brings back. A ROAS of 4 (often written 4× or 400%) means 4 in revenue for every 1 spent. The formula is ROAS = revenue from ads ÷ ad spend. Spend 1,500 and generate 6,300 in sales and the ROAS is 4.2×. Because ROAS uses revenue, not profit, you also need your break-even ROAS: 1 ÷ gross margin. With a 40% margin you need 2.5× just to cover the cost of the ads; anything below that loses money even though the ROAS looks positive.
Platform-reported ROAS often counts sales that would have happened anyway, so test with hold-out groups when budgets get large. Include returns and discounts in revenue for an honest figure. Compare a metric with your own past campaigns before comparing it with industry averages, which vary enormously by platform, country, season and audience. Every calculation happens in your browser; your campaign data is not uploaded.
FAQ
What is a good ROAS?
Anything above your break-even ROAS is profitable. Many online shops target 3–4× or more.
How is ROAS different from ROI?
ROAS divides revenue by ad spend. ROI uses profit after all costs, so it is a stricter measure.
How do I calculate break-even ROAS?
Divide 1 by your gross margin. At a 25% margin, break-even ROAS is 4×.