Return on ad spend measures how much revenue your advertising brings back for every unit of money spent. Spend $5,000 on a campaign that produces $20,000 of sales and the ROAS is 4x. It is the standard yardstick on Google Ads, Meta and Amazon, but on its own it does not tell you whether the campaign made money. Enter your gross margin and this calculator also shows the break-even ROAS and the profit left after the ad bill, so you can set a target that is grounded in your own economics rather than a rule of thumb.
ROAS Calculator
Return on ad spend answers the question every advertiser asks first: for each rupee or dollar I put into ads, how much revenue comes back? The ROAS calculator divides the revenue attributed to a campaign by what it cost. Spending $5,000 to generate $20,000 is a ROAS of 4x, or 400%; the same figure expressed the other way round is an ACoS (advertising cost of sale) of 25%.
A high ROAS is not automatically profitable. If your gross margin is 40%, only $8,000 of that $20,000 is gross profit, so the campaign clears $3,000 after the ad bill. Enter your margin and the calculator shows the break-even ROAS, the point at which ads pay for themselves and nothing more: 1 ÷ 0.40 = 2.5x in this example. Anything below that line is buying revenue at a loss, however good the headline number looks.
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Frequently Asked Questions
What is a good ROAS?
Only what beats your break-even ROAS, which is 1 divided by your gross margin. At a 40% margin you break even at 2.5x, so a 4x ROAS is profitable; at a 20% margin the same 4x barely covers its costs.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend and ignores product costs. ROI compares profit with total cost. A campaign can have a healthy ROAS and a negative ROI if the margin is thin.
What is ACoS?
Advertising cost of sale, used on Amazon: ad spend divided by revenue. It is the inverse of ROAS, so a 4x ROAS is a 25% ACoS.
