ROAS (Return on Ad Spend) Calculator
Return on Ad Spend (ROAS):
ROAS Percentage:
Breakeven ROAS:
Net Profit (After Ad Spend):
Understanding ROAS: The Key to Profitable Advertising
Return on Ad Spend (ROAS) is a vital marketing metric that measures the efficacy of a digital advertising campaign. It helps businesses evaluate which methods are working and how they can improve future advertising efforts.
How to Calculate ROAS
The standard formula for ROAS is straightforward: Revenue / Cost. If you spend $1 on advertising and generate $5 in revenue, your ROAS is 5:1 or 500%.
Example Calculation:
Suppose an e-commerce store spends $2,000 on Facebook Ads in one month. Those ads result in $10,000 in total sales.
ROAS Calculation: $10,000 / $2,000 = 5.0
Result: For every $1 spent, the business earned $5 in revenue.
Suppose an e-commerce store spends $2,000 on Facebook Ads in one month. Those ads result in $10,000 in total sales.
ROAS Calculation: $10,000 / $2,000 = 5.0
Result: For every $1 spent, the business earned $5 in revenue.
Why ROAS Isn't the Only Metric That Matters
While a high ROAS looks impressive, it doesn't always mean a campaign is profitable. This is why our calculator includes a Breakeven ROAS calculation based on your profit margins. If your product margins are thin (e.g., 20%), you need a much higher ROAS to actually take home a profit compared to a high-margin service business (e.g., 80%).
What is a Good ROAS?
A "good" ROAS depends entirely on your industry and overhead costs. However, common benchmarks include:
- 4:1 (400%): Generally considered the benchmark for a successful campaign.
- 2:1 (200%): Often a breakeven point for many businesses after considering COGS and shipping.
- 10:1 (1000%): Exceptional performance, usually seen in high-intent search campaigns or retargeting.