Target ROAS calculator

A target ROAS has to clear break-even — one divided by gross margin — with enough headroom for costs the margin excludes. Ten thousand of revenue on two thousand of spend at a 40% margin is a 5× ROAS against a 2.5× break-even, leaving 2,000 of profit.

Target ROAS bidding trades volume against efficiency, and the relationship is not linear. Raising the target squeezes spend into the highest-converting slices of the auction and volume falls away sharply past a point; lowering it buys progressively worse traffic. The usual approach is to start above break-even, let the campaign gather enough conversions to be stable, then step the target down ten per cent at a time and watch whether incremental profit is still positive. Large jumps reset the learning phase and produce a fortnight of noise.