ROAS Calculator (Return on Ad Spend)
Measure the effectiveness of your advertising campaigns by calculating your revenue-to-cost ratio.
Your Results
ROAS Ratio: 0
Percentage: 0%
What is ROAS and Why Does it Matter?
Return on Ad Spend (ROAS) is a marketing metric that measures the amount of revenue your business earns for each dollar it spends on advertising. For online marketers and e-commerce business owners, ROAS is one of the most critical KPIs (Key Performance Indicators) to track because it directly links marketing costs to sales performance.
How to Calculate ROAS
The ROAS formula is straightforward:
For example, if you spend $1,000 on a Google Ads campaign and it generates $5,000 in revenue, your ROAS is 5:1 (or 500%). This means for every $1 you spent, you earned $5 in revenue.
What is a Good ROAS?
A "good" ROAS depends heavily on your profit margins, industry, and operating expenses. However, here are some general benchmarks:
- Under 2:1: Generally unprofitable. Your ad spend and COGS (Cost of Goods Sold) likely exceed your revenue.
- 4:1: The common benchmark for a "healthy" campaign. Most businesses are profitable at this level.
- 8:1 or higher: Exceptional performance. Your targeting and creative are highly optimized.
ROAS vs. ROI: What's the Difference?
While ROAS focuses strictly on the revenue generated from ad spend, ROI (Return on Investment) takes your total business expenses into account, including shipping, labor, and product costs. ROAS tells you if your ads are working; ROI tells you if your business is actually making a profit.