Calculate ROAS instantly from revenue and ad spend to see whether your ads are profitable.
ROAS (Return on Ad Spend) measures how much revenue you earn for every dollar spent on advertising. A 5x ROAS means you earn $5 for every $1 spent.
Why it matters: ROAS is the ultimate measure of ad campaign profitability. It helps you identify winning campaigns, set realistic budgets, and know when to scale or cut spend.
ROAS calculations are based on revenue directly attributed to ads. Consider your profit margins and customer lifetime value for a complete picture of campaign profitability.
ROAS measures how much revenue you earn for each dollar of ad spend. It's the core efficiency metric for performance marketing—connecting spend directly to revenue.
ROAS is useful for comparing campaigns with different budgets because it normalizes by cost. A $10K campaign generating $40K revenue (4x ROAS) performs the same as a $1K campaign generating $4K.
Use ROAS for decisions: above your break-even threshold, scale. Below it, improve conversion rate, reduce costs, or change creative and targeting. Always interpret ROAS in context—it depends on margins and attribution window.
ROAS equals revenue attributable to ads divided by ad spend. $6,000 revenue from $1,500 spend = 4x ROAS (4:1).
The formula is straightforward. The challenge is attribution: are you measuring "revenue from ads" consistently across time windows and platforms? Different settings give different numbers.
Remember: ROAS is revenue-based, not profit-based. You still need your margin structure to know whether a ROAS level is actually acceptable. 3x ROAS sounds great until you realize thin margins mean you're barely breaking even.
Break-even ROAS is the threshold where you stop losing money. What that threshold is depends on your margin structure.
30% gross margin = you need at least 3.3x ROAS to break even (1 ÷ 0.30).
50% margin = 2x ROAS.
Include all relevant costs: product, shipping, payment fees, returns. Defining your threshold makes ROAS actionable. Without it, ROAS is just a number. With it, you have a decision rule: above threshold = scale, below = optimize or stop.
ROAS and ROI are related but different.
ROAS focuses on revenue per ad dollar—fast to calculate, easy to compare across campaigns. It's useful for operational optimization.
ROI accounts for profit relative to investment. It includes costs beyond ad spend (fulfillment, overhead), making it better for executive-level decisions.
The right workflow: use ROAS for campaign optimization, then translate winners into ROI and payback to ensure growth is profitable. If ROAS looks strong but profit is weak, you have margin, conversion, or fulfillment problems—not an advertising problem.
A 4:1 ROAS (400%) is considered good for most industries. E-commerce typically aims for 3:1 to 5:1, while B2B with high lifetime value can profit at 2:1.
ROAS measures ad revenue vs ad spend only. ROI includes all costs (product, overhead, salaries). ROAS is always higher than true ROI.
Common causes: audience saturation, increased competition, creative fatigue, or reaching less qualified audiences as you scale beyond your core market.
Calculate your ideal ad budget based on revenue goals or plan reach from your budget.
Optimize your budget allocation across Meta, Google, TikTok, and LinkedIn based on your goals.
Estimate impressions, clicks, and conversions based on your budget and industry benchmarks.
Calculate your click-through rate and benchmark against industry standards.
Calculate your cost per click and compare against platform benchmarks.
Calculate cost per 1,000 impressions, total ad cost, or impressions from your budget in seconds.
