ROAS calculator

Revenue from ads

Ad spend

Gross margin

ROAS 5×

5000 ÷ 1000 · break-even at 1 ÷ 40%

As a percentage 500 %

ACoS 20 %

Break-even ROAS 2.5×

Gross profit after ad spend 1,000

Headroom above break-even 2.5×

Break-even ROAS = 1 ÷ gross margin

A 5× ROAS can still lose money

Break-even ROAS is one divided by gross margin. At a 40% margin you need 2.5× just to stand still, so a 5× campaign is genuinely profitable. At a 15% margin, break-even is 6.67× — and that same 5× campaign is losing money on every sale despite sounding excellent. Any ROAS target quoted without a margin behind it is a number without a meaning.

ROAS is revenue divided by ad spend. Five thousand from a thousand is 5×. Whether that is profitable depends on margin: break-even ROAS is one divided by gross margin, so a 40% margin needs 2.5× and a 15% margin needs 6.67×.

How to calculate ROAS

1 Enter revenue attributed to the ads and the spend that produced it.

2 Enter your gross margin — without it, ROAS means nothing.

3 Compare the ROAS against the break-even figure shown.

4 Use the headroom row to decide whether to scale or pull back.

ROAS and ACoS are the same relationship inverted — ACoS is ad spend over revenue, ROAS is revenue over ad spend — and which one you see depends on the platform rather than the maths. The deeper issue with both is attribution: a 5× ROAS reported by an ad platform counts every sale it can claim, including ones that would have happened anyway. Incrementality testing, where you turn a campaign off in some regions and compare, is the only honest way to know what the ads actually added.

Questions

What is a good ROAS? −

Anything above your break-even, which is one divided by gross margin. There is no universal figure.

How do I convert ROAS to ACoS? +

Does ROAS account for product cost? +

Should I trust platform-reported ROAS? +

ROAS or CPA? +

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