# ROAS Calculator: Return on Ad Spend

Page: https://alidemirbas.com.tr/en/calculators/roas

Use this return on ad spend calculator: enter the revenue your ads brought in and what you spent to get return on ad spend as a multiplier.

**How to calculate ROAS**

`ROAS = Revenue from ads ÷ Ad spend`

1. Take the revenue your ads are credited with in a period, using one attribution setting for the whole report.
2. Take the ad spend for the same campaigns and the same period. Count media cost only, unless you add agency or tool fees to every row you compare.
3. Divide revenue by spend. The result is a multiplier: 5.00x means five units of revenue for each unit spent.

`$5,000 revenue ÷ $1,000 ad spend = 5.00x ROAS`

## What is ROAS (return on ad spend)

ROAS, short for return on ad spend, is the revenue an ad campaign brought in divided by what the campaign cost. A ROAS of 5x means every dollar of ad spend was matched by five dollars of attributed revenue. The same calculation works for a single ad, a campaign, a channel or a whole account. That lets you use ROAS to see where your ad money earns the most revenue.

The ratio measures revenue only. It never sees the cost of the product, shipping, payment fees or returns. A 5x on a thin-margin product can therefore leave less profit than a 3x on a high-margin one. To know whether a ROAS works for your business, compare it with your break-even ROAS. It comes from your margin per order after product cost, shipping, payment fees and returns. The [gross margin calculator](https://alidemirbas.com.tr/en/calculators/gross-margin) gives you the first part of that, and the steps are worked out below.

Ad platforms often show ROAS as a percentage. Google Ads, for example, expresses a target of five units of sales per unit of ad spend as a 500% target ROAS ([Google Ads Help: About Target ROAS bidding](https://support.google.com/google-ads/answer/6268637?hl=en)). Both forms carry the same information: 5x and 500% each mean five units of revenue per unit of spend. This calculator shows the multiplier, so divide a platform percentage by 100 before you compare the two.

> A ROAS figure only means something next to the break-even ROAS your margin requires.

## Break-even ROAS formula and the target above it

The break-even ROAS formula is 1 ÷ margin. Here margin is the share of each sale left after the product cost and the other per-order costs (shipping, payment fees, expected returns), written as a decimal. The gross margin calculator subtracts only the cost of goods sold, so take its result and subtract those other costs before you use it here. At that ROAS the margin on ad-driven sales exactly pays for the ads. The table below works through common margin levels so you can see how quickly the threshold moves.

| Margin after per-order costs | Break-even ROAS | As a percentage | What it means |
| --- | --- | --- | --- |
| 20% | 5.00x | 500% | Each dollar of ads needs five dollars of revenue just to pay for itself |
| 30% | 3.33x | 333% | A 3x campaign still loses money |
| 40% | 2.50x | 250% | A 3x campaign leaves a small profit |
| 50% | 2.00x | 200% | Revenue at twice the spend covers the ads |
| 60% | 1.67x | 167% | Even a 2x campaign is profitable |

The lower your margin, the higher the ROAS you need, and the curve gets steep below 30%. That is why no single company-wide figure works as a good ROAS. Start from the [gross margin calculator](https://alidemirbas.com.tr/en/calculators/gross-margin), take off shipping, payment fees and returns to get your margin, then use the break-even number as the floor for every campaign that sells that product.

A target ROAS sits above that floor. If you want each sale to leave some profit after the ads are paid for, start from the margin after per-order costs. Subtract the profit margin you want to keep, then divide 1 by the result. With a 40% margin after per-order costs and a 10% profit goal, the target is 1 ÷ (0.40 − 0.10) = 3.33x. That is the figure a target ROAS calculator gives you, and the one you would enter in Google Ads as 333%.

## ROAS vs ROI, and what to check before you act

ROAS vs ROI comes down to what each one divides. ROAS divides revenue by ad spend. ROI, or return on investment, subtracts costs first and divides the profit by the total investment. A campaign with $5,000 of revenue, $1,000 of spend and a 30% margin has a 5x ROAS. It earns $1,500 of gross profit, which leaves $500 after the $1,000 of ads, a 50% ROI. Before you raise or cut a budget because ROAS moved, check these four things:

- Same attribution window: a 7-day and a 28-day click window credit different sales to the same ads, so ROAS can change with no change in real sales.
- Revenue counted once: Google Ads and Meta can each claim the same order. Adding their revenue together overstates the total, so compare each platform with its own history or with your store's order data.
- Complete spend: if one report includes agency fees and another does not, the two ratios are not comparable.
- Real change or noise: a few large orders can swing ROAS in a small campaign. Check whether more clicks or a better [conversion rate](https://alidemirbas.com.tr/en/calculators/cr) drove the movement.

ROAS also says nothing about whether a customer comes back. A first order can show a weak ROAS and still pay off when the customer buys again. The [LTV:CAC ratio](https://alidemirbas.com.tr/en/calculators/ltv-cac-ratio) answers that question. For a per-customer view of the same spend, use the [CAC calculator](https://alidemirbas.com.tr/en/calculators/cac). The two answer different questions about the same budget: ROAS prices the spend per unit of revenue, CAC prices it per new customer.

## When to use ROAS

Use ROAS to compare campaigns, channels or periods on revenue per unit of spend, with the attribution window and the definition of spend held fixed. It is most useful in ecommerce, where every conversion carries a revenue value. When ROAS falls, the [CPC calculator](https://alidemirbas.com.tr/en/calculators/cpc) shows whether clicks became more expensive, and the conversion rate shows whether fewer of them turned into orders.

## Where ROAS misleads

Attribution settings can change ROAS without any change in underlying sales. Platforms can each claim the same order, so platform-reported revenue added together comes out larger than real sales. Retargeting and branded search campaigns reach people who were already close to buying, so they can show a high ROAS. Part of that revenue might have arrived without the ads.

## Frequently Asked Questions

### What is ROAS?

ROAS, or return on ad spend, is the revenue attributed to your ads divided by what you spent on them. A ROAS of 4x means four dollars of revenue came back for every dollar of ad spend. It measures revenue efficiency, so you can use it to compare campaigns or channels quickly. It does not measure profit, because product, shipping and other costs are left out. Read it next to your break-even ROAS to know whether a campaign actually makes money.

### How do you calculate ROAS?

Here is how to calculate ROAS: divide the revenue from ads by the ad spend for the same period. ROAS = Revenue ÷ Ad spend. If $1,000 of ads brought in $5,000 of revenue, ROAS is 5,000 ÷ 1,000 = 5.00x, or 500% if your platform shows percentages. For a clean ROAS calculation, use one attribution setting for the whole period and include the same costs in every row you compare.

### What is the difference between ROAS and ROI?

ROAS divides revenue by ad spend. ROI divides profit by the total investment, so it accounts for product cost, fees and other expenses. A campaign can have a high ROAS and a negative ROI when margins are thin. With a 15% margin, for example, a 5x ROAS leaves 0.75 of gross profit for each unit of ad spend, so the campaign loses a quarter of what it spent. Use ROAS to compare campaigns quickly and ROI to decide whether the activity is profitable.

### How do you calculate break-even ROAS?

Divide 1 by your margin after per-order costs, written as a decimal. With a 40% margin, break-even ROAS is 1 ÷ 0.40 = 2.50x. Below that figure the margin on ad-driven sales does not cover the ads. Above it, the campaign adds profit. The gross margin calculator subtracts only the cost of goods sold, so subtract per-order costs such as shipping, payment fees and expected returns from its result first, or the break-even point comes out too low. Every product line with a different margin has its own break-even ROAS.

### How do you set a target ROAS in Google Ads?

Google Ads asks for target ROAS as a percentage. It describes the target as the average conversion value you want for each dollar of ad spend. It shows $5 of sales per $1 of spend as a 500% target ([Google Ads Help: About Target ROAS bidding](https://support.google.com/google-ads/answer/6268637?hl=en)). To find your own, subtract the profit margin you want to keep from your margin after per-order costs, divide 1 by the result and multiply that multiplier by 100. Google also notes that the target you set may influence total conversion value, so change it in small steps and watch revenue alongside ROAS.