What is ROAS and how is it calculated?

Return on ad spend is the revenue your ads generate divided by what you spent on them. $4,000 of sales from $1,000 of ads is a ROAS of 4.0, also written 4:1 or 400%. It measures how efficiently ad money turns into revenue, but it says nothing about profit until you compare it with your margin.

It depends on your margin. A ROAS of 4:1 is often quoted as a benchmark, but a store with a 20% gross margin needs 5:1 just to break even, while one with a 60% margin breaks even at about 1.7:1. A good ROAS is one comfortably above your own break-even ROAS, which this calculator shows.

What is break-even ROAS?

It is the ROAS at which your ads earn back exactly what they cost, with no profit and no loss. It equals 1 divided by your gross margin: at a 40% margin it is 2.5. Any ROAS above it makes a profit on the ad spend and any ROAS below it loses money.

What is the difference between ROAS and ROI?

ROAS compares revenue with ad spend, while ROI compares profit with ad spend. A ROAS of 4.0 means $4 of revenue per ad dollar, but if only 40% of that revenue is gross profit the ROI is 60%, because $1.60 of profit comes back for each dollar spent on ads, a net gain of $0.60.

What is ACOS and how does it relate to ROAS?

ACOS, the advertising cost of sales used on Amazon, is ad spend divided by revenue, so it is the inverse of ROAS expressed as a percentage. A ROAS of 4.0 equals an ACOS of 25%. Lower ACOS is better, whereas higher ROAS is better.

Can I trust the ROAS my ad platform reports?

Treat it as an estimate. Platforms attribute sales using their own rules, so the same sale can be claimed by more than one channel, and reported revenue usually includes orders that are later refunded. Compare the platform figure with the sales and spend in your own accounts, and use your real gross margin in this calculator.

📊 Business & Ecommerce

ROAS Calculator · Return on Ad Spend and Break-Even ROAS

Return on ad spend, usually shortened to ROAS, tells you how many dollars of revenue each dollar of advertising brought in. If you spend $1,000 on ads and they generate $4,000 in sales, your ROAS is 4.0, often written 4:1 or 400%. It is the number every ad platform shows in its dashboard, and it is easy to misread, because revenue is not profit: a ROAS that looks healthy can still lose money once you pay for the product, the shipping and the payment fees.

The figure that matters is the break-even ROAS, the lowest ROAS at which the ads pay for themselves. It depends on your gross margin, the share of every sale left after product cost, shipping and fees. With a 40% gross margin you keep 40 cents of each dollar of revenue, so you need $2.50 of revenue for every dollar of ads just to break even. With a 20% margin you need $5.00. A store with thin margins therefore needs a much higher ROAS than one with high margins, and a generic target such as 4:1 can be too low or too high for your business.

Enter your ad spend, the revenue the ads brought and your gross margin. The calculator returns your ROAS, your break-even ROAS, the profit left after paying for the ads and your ROI. If you add the number of orders it also shows your cost per order and the most you can pay to acquire an order without losing money, and if you set a target net margin it works out the ROAS you need to reach it. The same math works for Google, Meta, TikTok, Amazon or any other paid channel.

Detailed Breakdown

11 metrics

PRIMARY RESULT

4.00x

Return on Ad Spend (ROAS)

Break-Even ROAS

2.50x

Profit After Ad Spend

$3,000.00

Net Profit Margin After Ads

15.0%

ROI on Your Ad Spend

60.0%

Gross Profit Before Ads

$8,000.00

ROAS Needed for a 15% Net Margin

4.00x

Cost per Order (CPA)

$12.50

Average Order Value

$50.00

Maximum CPA to Break Even

$20.00

Profit per Order

$7.50

Behind this is dedication and a desire to help

ClaruSite is 100% free and independent. Your support helps keep these financial tools fast, accurate, and available to everyone.

Donate with PayPal

exploreReal-World Scenarios

When to Use This Calculator

Everyday financial situations where this tool gives you fast, accurate clarity:

📣

Judge a Campaign

Find out whether a Google, Meta or TikTok campaign makes money after product costs, not just revenue.

🎯

Set Your Target ROAS

Work out the break-even ROAS for your margin and the ROAS you need for the profit you want.

💵

Cap Your Cost per Order

See the most you can pay to acquire an order before the ads start to lose money.

⚖️

Compare Channels

Run the numbers for each ad channel with its own spend and revenue to decide where to put the budget.

Calculation Formula

Standard Method

ROAS = Revenue from the Ads ÷ Ad Spend Break-Even ROAS = 1 ÷ Gross Margin Profit After Ad Spend = Revenue × Gross Margin − Ad Spend Net Profit Margin After Ads = Profit After Ad Spend ÷ Revenue ROI on Ad Spend = Profit After Ad Spend ÷ Ad Spend ROAS Needed for a Target Net Margin = 1 ÷ (Gross Margin − Target Net Margin) With the number of orders: Cost per Order (CPA) = Ad Spend ÷ Orders Average Order Value = Revenue ÷ Orders Maximum CPA to Break Even = Average Order Value × Gross Margin Profit per Order = Profit After Ad Spend ÷ Orders Gross margin here is the share of revenue left after the cost of the goods, shipping and payment fees, before advertising. Overhead, taxes and returns that you do not include in that margin are not counted.

Benchmark Example:

A store spends $5,000 on ads that bring $20,000 in revenue from 400 orders. After product cost, shipping and fees it keeps 40% of each sale: • ROAS: $20,000 ÷ $5,000 = 4.00x • Break-even ROAS: 1 ÷ 0.40 = 2.50x, so the ads are profitable • Gross profit before ads: $20,000 × 40% = $8,000 • Profit after ad spend: $8,000 − $5,000 = $3,000 • Net profit margin after ads: $3,000 ÷ $20,000 = 15% • ROI on the ad spend: $3,000 ÷ $5,000 = 60% • Cost per order: $5,000 ÷ 400 = $12.50, against an average order of $50 • Most you can pay for an order and break even: $50 × 40% = $20.00 • ROAS needed for a 15% net margin: 1 ÷ (0.40 − 0.15) = 4.00x If the margin were only 20%, the break-even ROAS would be 5.00x and the same ads would lose $1,000.

Frequently Asked Questions

6 answers

Applicable Laws & Regulatory Standards

Federal Trade Commission

Official Legal Reference

FTC Act § 5 — 15 U.S.C. § 45 (Unfair or Deceptive Acts or Practices)

Prohibits deceptive advertising: claims in an ad must be truthful and backed by evidence, whatever the platform it runs on.

FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising — 16 CFR Part 255

Requires influencers and advertisers to disclose material connections, such as payment or free products, when they promote a product, which applies to paid social and creator campaigns.

Lanham Act § 43(a) — 15 U.S.C. § 1125(a) (False Advertising)

Lets a competitor sue over false or misleading commercial advertising, which is a reason to keep performance and savings claims in ads accurate.

Legal citations and statutes are provided for consumer transparency, analytical validation, and educational reference under U.S. consumer financial regulations. This tool is not a substitute for formal legal, accounting, or tax counsel.

💡

Found an error or have a suggestion?

Help us calibrate this tool for US regulations and consumer standards.

Send Feedback

Related Calculators for Better Decisions

Amazon Selling Price Calculator 2026 — Target FBA Profit & Margin ROI Calculator · Return on Investment & Annualized Return Freelance Rate Calculator · Hourly Rate to Hit Your Income Goal Shopify Profit Calculator · Fees, Margin and Pricing