Paid media
ROAS meaning, formula and calculator
ROAS means return on ad spend: the revenue your ads bring in for every dollar they cost. The calculator divides ad revenue by ad spend, and the break-even calculator shows whether that ROAS makes money.
ROAS in one step
Ad revenue divided by ad spend.
Break-even ROAS
Your gross margin shows whether that ROAS makes money.
Any currency
Both calculators work in any currency.
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ROAS calculator
Free to use, no sign-up. Any currency, as long as both amounts use the same one. The result updates as you type.
Return on ad spend (ROAS)
4.20x
21,000 revenue ÷ 5,000 ad spend = 4.20.
That is 4.20 in revenue for every 1 spent on ads: 4.20:1 as a ratio, 420% as a percentage.
ACoS, the inverse: 5,000 ÷ 21,000 × 100 = 23.81% of revenue went on ads.
ROAS counts revenue, not profit. Check it against your break-even ROAS below.
Formula
ROAS = revenue from ads / ad spend
ACoS = ad spend / revenue from ads * 100Short answer
ROAS means return on ad spend: the revenue an ad campaign brings in divided by what the campaign cost. It measures revenue, not profit, so read it against your break-even ROAS, which is 1 divided by your gross margin. Above that line the ads pay for themselves; below it they cost more than the gross profit they bring in.
- The ROAS formula is revenue from ads divided by ad spend, for the same campaigns and the same dates.
- A ratio, a multiple and a percentage are only different ways of writing the same ROAS.
- There is no universal good ROAS: the lower your margin, the higher the ROAS you need to break even.
- Account ROAS is total revenue divided by total spend, not the average of each campaign's ROAS.
- Raising the landing page's conversion rate raises ROAS at the same ad spend.
Break-even ROAS calculator
The ROAS your ads need just to pay for themselves, from your gross margin.
Break-even ROAS
2.50x
1 ÷ 40% gross margin = 2.50. Each 1 of revenue leaves 0.40 of gross profit, so ads must bring in 2.50 per 1 spent to pay for themselves.
Break-even ACoS is your margin: 40%.
Your ROAS of 4.20 is above break-even: each 1 of ad spend leaves about 0.68 of gross profit after paying for the ads.
Formula
break-even ROAS = 1 / gross margin
break-even ACoS = gross marginROAS meaning: what does ROAS stand for?
ROAS stands for return on ad spend. It is the revenue an advertising campaign brings in divided by what the campaign cost. A ROAS of 4.20 means 4.20 in revenue for every 1 spent on ads. It measures how efficiently ad spend turns into sales, not whether those sales were profitable. It is one of several key ecommerce metrics that only make sense together.
Advertisers use ROAS to compare campaigns, ad groups and channels on one scale, to decide where the next dollar of budget goes, and to set targets for automated bidding. Because it ignores product costs, ROAS on its own cannot tell you whether a campaign makes money. That is the job of the break-even ROAS further down this page.
How to use the ROAS calculator
- Pick one scope. A campaign, a channel or the whole account, over one date range.
- Enter revenue from ads. The conversion value your ad platform or analytics credits to those ads.
- Enter ad spend. What the same ads cost over the same dates.
- Read ROAS and ACoS. The result shows the ratio, the percentage and ACoS, with the sum written out.
- Check break-even. Enter your gross margin in the second calculator to see whether that ROAS makes money.
What is the ROAS formula?
The ROAS formula is revenue from ads divided by ad spend. Both numbers must cover the same campaigns and the same dates. With 21,000 in revenue from 5,000 in ad spend, ROAS is 21,000 / 5,000 = 4.20. The result has no unit, so the formula works in any currency.
ROAS = revenue from ads / ad spendThe same result is written in several ways. They are not different metrics, only different formats, and mixing them up is a common source of confusion when two tools disagree.
| Format | How it is written | Where you see it |
|---|---|---|
| Ratio | 4.20 or 4.20:1 | Most reports and spreadsheets |
| Multiple | 4.20x | Ecommerce teams and agency reports |
| Percentage | 420% | Google Ads target ROAS, which is set as a percentage |
| ACoS (the inverse) | 23.81% | Amazon Ads, which reports ad spend as a share of ad revenue |
Where to find ROAS in Google Ads and Amazon Ads
In Google Ads, add the Conv. value / cost column from the Conversions columns: that is ROAS as a ratio. Google's help center says to multiply it by 100 to get the percentage you would enter as a target ROAS, so a ratio of 5 becomes a 500% target. On Amazon, the headline metric is ACoS, which Amazon Ads defines as ad spend divided by ad revenue, times 100; ROAS is its inverse.
How do you calculate ROAS? A worked example
To calculate ROAS, total the revenue credited to your ads, total what those ads cost over the same dates, and divide the first by the second. Then compare the result with your break-even ROAS. The numbers below are the default values in the calculators, made up to show the arithmetic; they are not a benchmark.
- Revenue from ads: 21,000. Ad spend: 5,000.
- ROAS = 21,000 / 5,000 = 4.20 (420%).
- Gross margin is 40%, so gross profit on that revenue is 21,000 × 0.40 = 8,400.
- Gross profit after paying for the ads: 8,400 - 5,000 = 3,400.
- Break-even ROAS at a 40% margin is 1 / 0.40 = 2.50. At 4.20, every 1 of ad spend leaves about 0.68 of gross profit.
Why you cannot average ROAS across campaigns
Account ROAS is total revenue divided by total spend, not the average of each campaign's ROAS. The same 5,000 of spend, split across three campaigns:
| Campaign | Ad spend | Revenue | ROAS | Gross profit after ads |
|---|---|---|---|---|
| Search | 2,000 | 12,000 | 6.00 | +2,800 |
| Shopping | 1,800 | 6,300 | 3.50 | +720 |
| Paid social | 1,200 | 2,700 | 2.25 | -120 |
| Account | 5,000 | 21,000 | 4.20 | +3,400 |
The simple average of the three ROAS figures is 3.92, but the account's real ROAS is 4.20, because the campaigns spend different amounts. The table also shows why the account number is not enough: the account makes money, while paid social, at 2.25, sits below the 2.50 break-even line and loses 120 of gross profit. Always look at ROAS by campaign as well as in total.
What is break-even ROAS?
Break-even ROAS is the return on ad spend at which the gross profit from ad-driven sales exactly pays for the ads. It equals 1 divided by your gross margin. At a 40% margin, break-even ROAS is 2.50: below it, each sale the ads bring in costs more to win than it earns.
break-even ROAS = 1 / gross marginUse gross margin after every cost that grows with each sale: the product, shipping, payment fees, packaging and the cost of returns. Leave out fixed costs such as rent and salaries; they are covered by the profit above break-even. Amazon Ads makes the same point from the other side: to stay profitable, ACoS has to be lower than your profit margin.
The calculator above starts from a margin you already know. To build that margin from one order's price, product cost, shipping, payment fees, discounts and refunds, and to get your break-even CPA and a target ROAS with it, use the break-even ROAS calculator. For the payment fee on that order, the Stripe fee calculator works it out from Stripe's published US rates or from your own.
| Gross margin | Break-even ROAS | As a percentage | Break-even ACoS |
|---|---|---|---|
| 20% | 5.00 | 500% | 20% |
| 25% | 4.00 | 400% | 25% |
| 30% | 3.33 | 333.3% | 30% |
| 40% | 2.50 | 250% | 40% |
| 50% | 2.00 | 200% | 50% |
| 60% | 1.67 | 166.7% | 60% |
| 75% | 1.33 | 133.3% | 75% |
| 100% | 1.00 | 100% | 100% |
The lower your margin, the higher the ROAS you need. That is why one store can be delighted with a ROAS that would sink another.
What is a good ROAS?
A good ROAS is one above your break-even ROAS, with enough room for the profit you want to keep. There is no universal good figure, which is why this page publishes no average: a business with a 75% margin breaks even at 1.33, while one with a 20% margin needs 5 just to cover its ads.
Published "average ROAS" figures are a weak guide for the same reasons conversion rate benchmarks are. They rarely say whether revenue is gross or net of returns, which attribution window was used, or which margins the businesses run on, and they come from one platform's or one vendor's customers. Your own break-even line is the number that matters.
How to set a target ROAS
A target ROAS adds the profit you want to the break-even line. Decide what share of revenue you want to keep as profit after ad costs, subtract it from your gross margin, and divide 1 by what is left. With a 40% margin and 10% of revenue kept as profit, ads may take 30% of revenue, so the target ROAS is 1 / 30% = 3.33, or 333.3% as a Google Ads target.
target ROAS = 1 / (gross margin - profit share you want to keep)Two things move the target. New customers who buy again later are worth more than their first order, so a business with strong repeat purchase can accept a lower ROAS on prospecting campaigns. And a target set too high can starve a campaign: Google's help center notes that a target ROAS that is too high may limit how much traffic your ads get.
Reading common ROAS numbers
- ROAS of 1 (100%). Revenue equals ad spend. Every sale loses money once the product is paid for, unless your margin is 100%.
- ROAS of 2.5 (250%). Break-even at a 40% margin.
- ROAS of 4 (400%). Break-even at a 25% margin; profitable above it. Equal to a 25% ACoS.
- ROAS of 5 (500%). 5 in revenue per 1 of spend. Break-even at a 20% margin. The example target Google uses in its help center.
- ROAS of 7 or more. Clearly profitable at most margins on paper. Before you scale it, check how much comes from branded search or returning customers who might have bought anyway.
ROAS vs ROI, ACoS, CPA and MER
ROAS divides revenue by ad spend. ROI divides profit by the whole investment, ACoS flips ROAS into a percentage of sales, CPA divides ad cost by conversions, and MER divides all revenue by all marketing spend. Each answers a different question, so a healthy ROAS can sit alongside a poor ROI.
| Metric | Formula | What it answers |
|---|---|---|
| ROAS | Revenue from ads / ad spend | How much revenue each unit of ad spend brings in |
| ROI | (Gain - total cost) / total cost | Whether the whole investment made a profit, after product and other costs |
| ACoS | Ad spend / revenue from ads × 100 | What share of ad revenue went on ads (Amazon's main metric; 1 / ROAS) |
| CPA | Ad cost / conversions | What each sale, lead or sign-up cost to win, useful when conversions have no fixed value |
| MER (marketing efficiency ratio) | Total revenue / total marketing spend | How the business does overall, without trusting any one platform's attribution |
Use ROAS when every conversion has a revenue value, as in ecommerce. When conversions are leads or sign-ups with no value attached, CPA is the better measure: see the CPA formula and cost per acquisition calculator. To turn a ROAS into a return on gross profit, enter the same spend and revenue with your gross margin in the ROI calculator.
Why ROAS can mislead
ROAS can mislead because the revenue in it is whatever the ad platform credits to its own ads. Attribution windows, view-through credit, returns, repeat buyers and branded searches can all make a campaign look better or worse than the cash it really brought in. Read ROAS as a platform's claim, then check it.
- Attribution. Each platform credits itself. Add up the revenue that each ad platform and your email tool claim, and the total can be more than the store actually took. Consistent UTM tags, built with the UTM generator, let your own analytics check each claim against the same campaign names.
- Incrementality. A customer searching for your brand name may have bought anyway. High ROAS on brand terms does not mean those ads created the sale.
- Revenue, not profit. Discounts, free shipping and low-margin products can raise ROAS and cut profit. The profit calculator takes the cost of the goods, the fees, the ad spend and the overheads off the revenue to show what was kept.
- Returns and cancellations. Conversion value is usually recorded at checkout, before anything is sent back.
- Lifetime value. First-order ROAS undervalues campaigns that win customers who buy again. The customer lifetime value calculator puts a figure on those later orders.
- Tracking gaps. Blocked scripts, declined cookies and broken tags remove revenue from the numerator.
How to improve ROAS: the three levers
ROAS has three levers: the conversion rate of the people who click, the average order value of those who buy, and the cost per click. ROAS equals conversion rate times average order value divided by cost per click, so raising either of the first two or lowering the third improves it, and two of the three are decided on your website, not in the ad account.
ROAS = conversion rate * average order value / cost per clickBuying media per thousand impressions, not per click? The CPM calculator turns a CPM and a click-through rate into the cost per click this formula needs.
The default example again: 5,000 at a cost per click of 1.25 buys 4,000 clicks. At a 3.50% conversion rate that is 140 orders, and at an average order value of 150 that is 21,000 in revenue: 3.50% × 150 / 1.25 = 4.20. Here is what each lever does on its own:
| Lever | Change | ROAS | Change in ROAS |
|---|---|---|---|
| Starting point | None | 4.20 | None |
| Conversion rate | 3.50% to 4.00% | 4.80 | +14.3% |
| Average order value | 150 to 165 (10% higher) | 4.62 | +10.0% |
| Cost per click | 1.25 to 1.125 (10% lower) | 4.67 | +11.1% |
- Fix the landing page first. A page that does not match the ad, loads slowly on a phone or hides the price wastes every click you pay for. Raising the conversion rate raises ROAS at the same spend. The free landing page analyzer lists what to fix first.
- Raise order value. Bundles, quantity breaks and a free shipping threshold above the typical order lift revenue per buyer.
- Cut wasted clicks. Add negative keywords, exclude placements and audiences that never buy, and pause ads whose ROAS sits below break-even.
- Move budget by margin. Shift spend toward products and campaigns whose ROAS clears their own break-even line, not the account average.
- Feed bidding real values. Send accurate conversion values, net of discounts where you can, so automated bidding optimizes for revenue that exists.
- Test, do not guess. Run landing page changes as A/B tests, planned with the A/B test sample size calculator, so you know a lift is real.
The conversion rate lever is where Convertica works. The free CRO audit checks a page your ads send people to: the first screen, calls to action, forms, trust, mobile, speed and AI agent readiness, ranked by likely impact. See the CRO audit page for the full list of checks.
Related calculators
ROAS sits next to two other numbers in any paid media report: what each conversion costs, and how many visitors convert. The line it has to clear comes from your own prices and costs.
See all free tools and how they fit together.
ROAS FAQ
What is the ROAS meaning in marketing?
ROAS means return on ad spend. It is the revenue an ad campaign brings in divided by what the campaign cost, so a ROAS of 4 means 4 in revenue for every 1 spent on ads. It measures revenue, not profit, so it has to be read against your margin.
How do you calculate ROAS?
Divide the revenue attributed to your ads by your ad spend for the same period. For example, 21,000 in revenue from 5,000 in ad spend is 21,000 / 5,000 = 4.2, written as 4.2, 4.2x, 4.2:1 or 420%. Use the revenue and spend from the same platform and date range.
What does a ROAS of 4 mean?
A ROAS of 4 (also written 4:1, 4x or 400%) means the ads brought in 4 in revenue for every 1 they cost. Whether that is profitable depends on your gross margin: at a 25% margin, 4 is exactly break-even; at a 40% margin, the break-even ROAS is 2.5, so 4 leaves a profit.
What does a ROAS of 5 mean?
A ROAS of 5, also written 500% or 5:1, means every 1 dollar of ad spend brought back 5 dollars in tracked revenue. Whether that is profitable depends on your margin: at a 20% gross margin, a ROAS of 5 is only break-even, because 5 dollars of revenue leaves 1 dollar of profit to cover the ad.
What is a good ROAS?
A good ROAS is one above your break-even ROAS, which is 1 divided by your gross margin, with enough room left for the profit you want. There is no universal good number: a business with a 75% margin breaks even at 1.33, one with a 20% margin needs 5. Work out your own before you compare campaigns.
Is a ROAS of 2.5 good?
A ROAS of 2.5 is exactly break-even for a business with a 40% gross margin: the ads pay for themselves and leave nothing over. With a higher margin it makes money; with a lower one it loses money on every sale it brings in, unless those buyers come back and buy again.
What ROAS is a 25% ACoS?
A 25% ACoS is a ROAS of 4. ACoS (advertising cost of sales, the metric Amazon Ads reports) is ad spend divided by revenue, the inverse of ROAS, so ROAS = 1 / ACoS = 1 / 0.25 = 4. In the same way, a 50% ACoS is a ROAS of 2.
What is the difference between ROAS and ROI?
ROAS divides revenue by ad spend only. ROI divides profit by the full investment, so it subtracts product costs, fees and other expenses first. A campaign can show a healthy-looking ROAS and still lose money once the cost of the goods it sold is counted, which is why ROAS needs a break-even line.
Is ROAS a percentage or a ratio?
ROAS is a ratio, but it is often shown as a percentage. 4.2, 4.2x, 4.2:1 and 420% all describe the same result. Google Ads sets a target ROAS as a percentage, while many reports show the plain ratio, so check which format a tool uses before you compare numbers.
How do I calculate ROAS in Excel or Google Sheets?
Put ad revenue in one cell and ad spend in another, then divide: with revenue in B2 and spend in C2, enter =B2/C2. To avoid an error on rows with no spend, use =IF(C2=0,"",B2/C2). For a percentage, multiply by 100 or format the cell as a percentage.
