ROAS (Return on Ad Spend) Calculator
Campaign Results
What is ROAS and Why is it Important?
Return on Ad Spend (ROAS) is a critical marketing metric that measures the amount of revenue your business earns for every dollar it spends on advertising. Unlike ROI, which looks at the overall profitability of an investment after all expenses, ROAS focuses specifically on the effectiveness of your ad creative and placement.
How to Calculate ROAS
The formula for ROAS is straightforward:
ROAS = Total Revenue Attributed to Ads / Total Ad Spend
For example, if you spend $2,000 on a Facebook Ads campaign and generate $10,000 in sales, your ROAS is 5.0x or 500%. This means for every $1 you spent, you earned $5 in revenue.
Understanding Break-even ROAS
Many advertisers make the mistake of thinking any ROAS above 1.0x is profitable. This is incorrect because it doesn't account for the Cost of Goods Sold (COGS) or operational overhead. To find your Break-even ROAS, use this formula:
Break-even ROAS = 1 / Gross Margin %
| Metric | Example Calculation | Result |
|---|---|---|
| High Margin (80%) | 1 / 0.80 | 1.25x Break-even |
| Low Margin (25%) | 1 / 0.25 | 4.00x Break-even |
What is a Good ROAS?
A "good" ROAS depends entirely on your industry and profit margins. Generally, a 4:1 ROAS (400%) is considered a benchmark for success in many e-commerce sectors, while specialized industries with high margins might thrive at 2:1. Always compare your current ROAS against your Break-even point to ensure actual profitability.