ROAS Calculator

This ROAS calculator helps you figure out if your ads are actually making you money. Whether you're running Facebook ads for your online store, managing Google campaigns, or testing TikTok ads, you need to know two things: your return on ad spend ratio and whether that ratio translates to actual profit.

Most ROAS calculators stop at the basic calculation. This one goes further. Enter your profit margin and you'll see your break-even ROAS—the minimum you need to avoid losing money. I built this because I was tired of seeing people celebrate a 5:1 ROAS when their margins meant they were bleeding cash.

ROAS stands for Return on Ad Spend, and it's probably the most-tracked metric in performance marketing. The concept is simple: for every dollar you spend on ads, how much revenue comes back?

The formula: ROAS = Ad Revenue ÷ Ad Spend

If you spend $1,000 on ads and generate $5,000 in revenue, your ROAS is 5:1 (or 500%).

A ROAS above 1:1 means you're bringing in more revenue than you're spending. Below 1:1, you're spending more than you're making back—an obvious red flag.

But here's the thing: ROAS doesn't tell you if you're profitable. That's where profit margins come in, and it's why most ROAS advice you see online is incomplete.

ROAS is different from ROI (Return on Investment), by the way. ROI measures your total profit relative to all costs. ROAS focuses specifically on ad revenue versus ad spend. ROAS is faster to calculate and easier to track for individual campaigns, which is why most marketers live and die by it.

So you've got your ROAS number. Now what? Here's a rough guide, but take it with a grain of salt—your margins will shift these ranges significantly:

| ROAS Range | General Assessment | What This Usually Means |
|------------|-------------------|------------------------|
| Below 1:1 | Losing money | You're spending more than you're bringing in |
| 1:1 to 2:1 | Breaking even or marginal | Likely unprofitable when factoring in product costs |
| 2:1 to 4:1 | Moderate performance | May be profitable depending on margins |
| 4:1 to 8:1 | Strong performance | Usually profitable for most business models |
| Above 8:1 | Excellent (or limited scale) | Very profitable, but may indicate small budget/untapped opportunity |

Now for the reality check nobody mentions: your profit margin matters way more than your ROAS ratio.

Let's say you're running a dropshipping store with 15% profit margins. You hit a 5:1 ROAS—sounds great, right? Let's do the math:

• Ad Spend: $1,000
• Revenue: $5,000 (5:1 ROAS)
• Gross Profit: $750 ($5,000 × 15%)
• Net Result: -$250 loss

You're losing money despite a "good" ROAS because your margins are too thin. This is why the break-even ROAS calculation matters so much—it shows you the minimum ROAS you need based on your actual business economics.

To calculate ROAS, you need two numbers: what you spent and what you made. Simple enough, but people mess this up all the time by leaving things out.

What counts as ad spend?

Don't just count what you paid Facebook or Google. Include agency fees if you're paying someone to run your ads, creative costs if you paid a designer or video editor, and any other money that went into making those ads happen. The goal is to see the true cost of generating that revenue.

What counts as ad revenue?

This is the revenue your platform attributes to your ads—usually based on a 7-day or 28-day click window. One thing to watch: use the same timeframe when you're comparing campaigns. Comparing 1-day attribution to 28-day attribution is like comparing apples to bicycles.

The calculation in action:

You spent $3,000 on Facebook ads last month. Your attribution tracking shows those ads generated $15,000 in revenue.

ROAS = $15,000 ÷ $3,000 = 5:1 (or 500%)

For every dollar you spent on ads, you brought in $5 in revenue. Whether that's good or bad depends entirely on your profit margin.

Everyone wants a simple answer to this, but there isn't one. What's "good" for a SaaS company with 85% margins would bankrupt a dropshipping store with 18% margins. That said, here are real-world benchmarks I've seen across different industries:

| Industry | Google Ads | Facebook/Meta | TikTok Ads |
|----------|-----------|---------------|------------|
| E-commerce (general) | 3:1 to 6:1 | 4:1 to 8:1 | 3:1 to 5:1 |
| Dropshipping | 2:1 to 3:1 | 3:1 to 5:1 | 2:1 to 4:1 |
| SaaS | 3:1 to 5:1 | 4:1 to 7:1 | N/A |
| Lead Generation | 4:1 to 10:1 | 5:1 to 12:1 | 4:1 to 8:1 |
| High-ticket products | 2:1 to 4:1 | 2:1 to 4:1 | 2:1 to 3:1 |

These numbers vary based on:

Product margins — Higher margins mean you can profit from lower ROAS. A luxury jewelry store with 70% margins makes money at 2:1 ROAS. An electronics store with 12% margins needs 6:1 or higher.

Customer lifetime value — If customers buy from you repeatedly, you can accept lower initial ROAS because you'll profit from future orders.

Business stage — Early-stage businesses often run lower ROAS while building brand awareness and testing channels. Established businesses with proven products need higher ROAS to justify the ad spend.

Attribution accuracy — What platforms report as ROAS often differs from reality due to attribution challenges, especially for longer sales cycles or multi-touch customer journeys.

Your "good" ROAS is the one that exceeds your break-even point and leaves enough margin to make the advertising worth your time and risk.

Basic ROAS Calculation:

1. Enter your total ad spend
2. Enter the revenue those ads generated
3. Get your ROAS instantly as both a ratio and percentage

Break-Even ROAS Mode (the important one):

1. Select "Yes" when asked if you know your profit margin
2. Enter your profit margin as a percentage (if your product costs $60 and sells for $100, your margin is 40%)
3. See both your actual ROAS and your break-even ROAS
4. Know immediately if you're profitable or need to optimize

The results show you right away whether you're above or below break-even, and by how much. This helps you decide whether to scale, optimize, or pause campaigns.

Break-even ROAS is the minimum ROAS you need to cover your costs without losing money. It's based on your profit margin:

Break-Even ROAS = 1 ÷ Profit Margin

If your profit margin is 25%, your break-even ROAS is: 1 ÷ 0.25 = 4:1

You need at least a 4:1 ROAS just to break even. Anything below that, and you're losing money on every sale.

Quick reference:

| Profit Margin | Break-Even ROAS | What This Means |
|---------------|-----------------|-----------------|
| 20% | 5:1 | Need $5 revenue per $1 ad spend to break even |
| 30% | 3.33:1 | Need $3.33 revenue per $1 ad spend to break even |
| 40% | 2.5:1 | Need $2.50 revenue per $1 ad spend to break even |
| 50% | 2:1 | Need $2 revenue per $1 ad spend to break even |
| 60% | 1.67:1 | Need $1.67 revenue per $1 ad spend to break even |

Example: You sell products with 35% profit margin. Your break-even ROAS is 2.86:1 (1 ÷ 0.35). If your current ROAS is 4:1, you're profitable—about 40% above break-even. That's good, but not enough buffer to scale aggressively without risk.

Most experienced marketers aim for 1.5× to 2× their break-even ROAS before scaling significantly. This buffer protects you when performance naturally decreases as you increase budget and exhaust your best audiences.

If you're running Amazon ads, you'll see ACOS (Advertising Cost of Sales) instead of ROAS. They measure the same thing from opposite directions:

ROAS = Revenue ÷ Ad Spend (How much you make per dollar spent) ACOS = Ad Spend ÷ Revenue (What percentage of revenue goes to ads)

To convert:

• ROAS to ACOS: ACOS = 1 ÷ ROAS
• ACOS to ROAS: ROAS = 1 ÷ ACOS

Example: If your ROAS is 4:1, your ACOS is 25% (1 ÷ 4 = 0.25). If your ACOS is 20%, your ROAS is 5:1 (1 ÷ 0.20 = 5).

Amazon sellers typically target ACOS below their profit margin. If your margin is 30%, you want ACOS under 30% (which equals ROAS above 3.33:1).

Ignoring profit margins — This is the mistake I see most often. Someone's running a 5:1 ROAS and thinks they're crushing it. Then you ask about their margins and it's 15%. They're losing money on every sale. Always, always calculate your break-even ROAS before you celebrate.

Not tracking all your costs — I'll ask someone what their ad spend is and they say "$5,000." Then I find out they're paying an agency $1,500/month and spent $800 on creative. Their real ad spend is $7,300, which completely changes their ROAS and profitability.

Attribution window confusion — This one catches everyone at least once. You're comparing your Facebook ROAS (7-day click attribution) to your Google ROAS (last-click attribution) and wondering why Facebook looks so much better. They're measuring different things. Stick with one attribution model when comparing platforms, or better yet, use your own analytics.

Comparing platforms directly — Facebook and Google measure conversions differently. A lower ROAS on Google doesn't mean worse performance—it might just mean different attribution. Look at total profit generated, not just ROAS ratios.

Forgetting about refunds and returns — Your ROAS might look amazing in week one, but if 20% of customers return their orders, your actual ROAS is significantly lower. Factor this in when setting targets.

Celebrating vanity metrics — A 5:1 ROAS on $100 spend looks good but doesn't move your business forward. You made $400 in profit (at best). Focus on absolute profit dollars, not just pretty ratios on tiny budgets.

Once you know your ROAS, what do you actually do about it? Here's how to decide:

Scale aggressively when your ROAS is 2× your break-even point. This buffer protects you against normal performance drops as you increase budget. If your break-even ROAS is 2.5:1, wait until you're consistently hitting 5:1 before you scale hard.

When you're ready to scale:

• Increase daily budget by 20-30% every 3-5 days (not all at once)
• Expand to similar audiences or keywords
• Add new ad placements or formats
• Test new platforms using your proven creative

Optimize first when you're 1.25-1.5× above break-even. You're profitable, but there's not enough cushion for aggressive scaling. Focus on improving ROAS before adding budget:

• Test new ad creative and messaging
• Refine audience targeting
• Improve landing page conversion rates
• Adjust bidding strategies
• Test different offers or promotions

Pause or restructure when you're below break-even ROAS. Unless you're explicitly testing new audiences or building data for retargeting, campaigns running below break-even are costing you money.

Before you pause completely, try:

• Cut budget to minimum while you fix creative/targeting
• Narrow to your best-performing segments only
• Test completely different approaches
• Pause for a week and relaunch with fresh creative

Remember: ROAS typically drops as you scale because you exhaust your best audiences first. A campaign might hit 6:1 ROAS at $1,000/day but drop to 4:1 at $3,000/day. This is normal. What matters is whether you're still above break-even and generating more total profit.

Sarah runs a boutique furniture store selling handmade pieces:

• Ad Spend: $10,000/month
• Revenue: $25,000/month
• ROAS: 2.5:1
• Profit Margin: 60%

At first glance, 2.5:1 seems mediocre. But check the profit:

• Gross Profit: $15,000 ($25,000 × 60%)
• Ad Spend: -$10,000
• Net Profit: $5,000

Sarah's break-even ROAS is only 1.67:1 (1 ÷ 0.60), so she's well above break-even and profitably scaling. High margins let you profit from ROAS numbers that would bankrupt other businesses.

Marcus runs a dropshipping store selling trending products:

• Ad Spend: $2,000/month
• Revenue: $10,000/month
• ROAS: 5:1
• Profit Margin: 15%

This looks great—5:1 ROAS! But watch what happens:

• Gross Profit: $1,500 ($10,000 × 15%)
• Ad Spend: -$2,000
• Net Result: -$500 loss

Marcus's break-even ROAS is 6.67:1 (1 ÷ 0.15). Despite hitting 5:1, he's losing money every month. He needs either better margins or much higher ROAS. Most likely, this business model doesn't work with paid ads.

Jennifer sells online courses at $297 each:

• Ad Spend: $3,000/month
• Revenue: $15,000/month
• ROAS: 5:1
• Profit Margin: 80% (digital products have no COGS)
• Break-Even ROAS: 1.25:1 (1 ÷ 0.80)

Current profit: $9,000 ($15,000 × 80% - $3,000)

Jennifer's ROAS is 4× her break-even point—she's crushing it. She has massive room to scale. Even if her ROAS drops to 3:1 during scaling, she'd still be 2.4× above break-even and highly profitable. Time to increase budget.

David runs ads on Facebook and Google. Which performs better?

Facebook:

• Spend: $5,000
• Revenue: $20,000
• ROAS: 4:1
• Profit Margin: 40%
• Gross Profit: $8,000
• Net Profit: $3,000

Google:

• Spend: $15,000
• Revenue: $45,000
• ROAS: 3:1
• Profit Margin: 40%
• Gross Profit: $18,000
• Net Profit: $3,000

Looking at ROAS alone, Facebook wins (4:1 vs 3:1). But Google generates the same absolute profit on 3× the spend. If David can scale Google to $30K spend while maintaining 3:1 ROAS, he'd generate $6,000 profit vs Facebook's $3,000.

The lesson: total profit dollars matter more than ROAS ratios when comparing channels.

Lisa's launching a new product and needs to set her ROAS target:

• Product sells for: $89
• Product costs (including shipping, fees): $45
• Profit per sale: $44
• Profit Margin: 49.4% ($44 ÷ $89)
• Break-Even ROAS: 2.02:1 (1 ÷ 0.494)

Lisa now knows she needs at least 2:1 ROAS to avoid losing money. She sets her target at 4:1 (2× break-even) to have a comfortable buffer for scaling. If she can consistently hit 4:1 for a few weeks, she'll know the product works and she can scale aggressively.

A word about attribution: Platform tracking has gotten messier since iOS 14 and all the privacy changes. Your Facebook ROAS might look 20-40% worse than it actually is because the platform can't track everything anymore. If your reported numbers dropped but revenue stayed steady, that's probably why. Consider using first-party tracking (like server-side conversion APIs) to improve accuracy.

Timeframe matters: Match your ROAS calculation to your typical customer purchase cycle. If people take 14 days to decide, checking 7-day ROAS won't show the full picture. Longer attribution windows give more complete data but make it harder to optimize quickly. Most e-commerce businesses use 7-day click attribution as a balance between accuracy and responsiveness.

Lifetime value isn't included: This calculator measures immediate ROAS, not customer lifetime value. If customers typically make repeat purchases, your true return is higher than initial ROAS shows. For subscription or repeat-purchase businesses, consider tracking both initial ROAS and LTV-based ROAS for the complete picture.

Platform reporting differs: Facebook, Google, TikTok, and other platforms all report ROAS differently based on their attribution models. When comparing performance across platforms, use third-party analytics or your own server-side tracking for consistency. Otherwise you're comparing apples to oranges.

Disclaimer: This calculator provides estimates based on the inputs you provide. Actual profitability depends on accurate tracking, complete cost accounting, and proper attribution setup. Use this as a starting point for analysis, but always verify numbers in your own analytics. Consider consulting with marketing and financial professionals for strategic business decisions. ROAS is one metric among many—evaluate it alongside customer acquisition cost, lifetime value, and overall business profitability.