ROAS calculator
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: 5,000 from 1,000 is 5×. Whether that is profitable depends on margin, because break-even ROAS is one divided by gross margin — 2.5× at a 40% margin, 6.67× at 15%. The blended version, MER, divides all revenue by all marketing spend and involves no attribution at all.
How to calculate ROAS
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. Break-even is where the meaning lives, and it is one over gross margin, which is why a high-margin business can run at 1.43× and stand still while a thin-margin one needs 5×. Setting an automated bidding target at exactly that break-even guarantees zero profit at best, because the platform will optimise toward the number and land around it; the target needs headroom for the costs the margin figure does not include — returns, payment fees, customer service and a share of overhead — so break-even plus a third is the usual starting point. Moving it is a slow business: raising the target squeezes spend into the highest-converting slices of the auction and volume falls away sharply, lowering it buys progressively worse traffic, and a change larger than about ten per cent resets the learning phase and produces a fortnight of noise. The deeper problem with any of these figures is attribution. A 5× ROAS reported by a platform counts every sale it can claim, including ones that would have happened anyway, and after privacy changes broke deterministic tracking the sum of every channel claimed revenue routinely exceeds actual revenue. MER sidesteps that by refusing to attribute anything: total revenue from the accounts against total spend, agency fees and creative included. It cannot tell you which channel to cut, which is why most teams read MER for the health of the whole and platform metrics for decisions within it.
What people use it for
- Judging whether a campaign is profitable
- Converting between ROAS and ACoS
- Deciding when to scale spend
- Setting a target ROAS for Smart Bidding or Advantage+
- Explaining to a client why 4× is not always good
- Sanity-checking an agency target
- Planning a campaign budget against a profit goal
- Negotiating a performance target with an agency
- Reporting marketing efficiency to a board
- Sanity-checking summed platform ROAS against actual revenue
- Setting a company-level marketing budget
- Deciding whether a campaign is worth keeping on at all
- Tracking overall efficiency through a scaling period
- Deciding how far to push for volume before a campaign stops paying
Questions
Anything above your break-even, which is one divided by gross margin. That break-even is the minimum worth running, and above it there is no universal figure.
Divide one by your gross margin. A 25% margin gives a break-even of 4×.
ACoS is one divided by ROAS, as a percentage. A 4× ROAS is a 25% ACoS.
No, only the advertising spend. That is exactly why break-even ROAS depends on margin.
Above break-even, and never at it: break-even ignores returns, payment fees and overheads, so a target sitting exactly on it loses money in practice. About a third above is the usual starting point, stepped down as actual profitability becomes clear. Google Ads writes the setting tROAS and takes it as a percentage where this page takes a multiple, so 4× is entered as 400%.
Volume collapses. A high target restricts spend to the easiest conversions and leaves most of the profitable auction untouched.
Ten per cent at a time, because larger changes reset the algorithm learning phase and produce weeks of noisy data. Expect one to two weeks to settle, or however long it takes the campaign to gather enough conversions to leave that phase.
Gross margin after cost of goods and fulfilment. Using a headline margin that ignores shipping is the usual error.
Because more of each sale survives to cover the ad. At a 70% margin, 1.43× is enough to stand still.
Marketing efficiency ratio: total revenue divided by total marketing spend, with no attribution modelling at all. ROAS is per campaign and depends on attribution; MER is company-wide and does not, which is why the two disagree.
It depends on margin and growth stage. Break-even is one divided by gross margin, same as ROAS; established shops often run 4–6×.
Because channels double-count the same sale. That gap is the clearest evidence of attribution inflation you will get.
No. Use it for overall health, and platform metrics or incrementality tests for channel decisions.
Treat it as an upper bound. Platforms claim sales that would have happened anyway; incrementality testing measures what was actually added.
ROAS for varied order values, CPA when every conversion is worth about the same.