ROAS Calculator

What is ROAS?

Return on ad spend (ROAS) measures how much revenue you generate for every dollar spent on advertising. It's the most common way to gauge whether a campaign, channel, or account is pulling its weight — expressed either as a ratio (4:1) or a percentage (400%).

Worked example: a campaign spends $2,000 and generates $8,000 in revenue. ROAS = 8000 ÷ 2000 = 4:1, or 400%.

ROAS vs ROI

ROAS and ROI both measure ad performance, but they answer different questions. ROAS is a pure revenue-to-spend ratio — it doesn't account for the cost of goods, so a high ROAS can still be unprofitable on thin margins. ROI is (revenue − spend) ÷ spend, expressed as a percentage — it tells you profit, not just revenue returned. A 4:1 ROAS on a $2,000 spend is $8,000 in revenue, or $6,000 in gross profit before costs — which is where ROI and margin come in.

FAQ

What is a good ROAS?

It varies hugely by margin, industry, and business model. A 4:1 ROAS is a common rough benchmark, but a high-margin SaaS product can be profitable at 2:1, while a thin-margin retailer might need 8:1 or more just to break even. Your break-even ROAS (see the calculator above) is a far more useful number than any universal benchmark.

ROAS vs ROI — what's the difference?

ROAS is revenue divided by spend, expressed as a ratio like 4:1 — it tells you how much revenue came back per dollar spent, before costs. ROI is (revenue minus spend) divided by spend, expressed as a percentage — it tells you profit relative to spend. A 4:1 ROAS and a 300% ROI describe the same campaign from two different angles: one is a revenue multiple, the other is a profit rate.

What ROAS do I need to be profitable?

That's your break-even ROAS: 1 ÷ (gross margin ÷ 100). At a 40% gross margin, you need at least a 2.5:1 ROAS just to cover costs — anything above that is profit. Use the second calculator above to find your own break-even point from your margin.