Return on ad spend
ROAS Calculator
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ROAS = Revenue ÷ Ad spend · Break-even = 1 ÷ Gross margin
ROAS is revenue divided by ad spend. With your gross margin it shows the break-even ROAS you must beat to actually profit after the cost of goods, rather than a generic target.
Profitable
ROAS
4.2x
Above your 2.00x break-even. $2,200 profit after ad spend and cost of goods.
Break-even ROAS2.00x
Profit after costs$2,200
Frequently asked questions
- What is ROAS and how do you calculate it?
- ROAS (return on ad spend) is revenue divided by ad spend. A campaign earning 8,400 on 2,000 of spend is 4.2x, so you get 4.20 back for every 1 you spend. It is a gross figure, measured before the cost of goods.
- What is a good ROAS?
- It depends on your gross margin, not a fixed number. The ROAS you must beat is your break-even ROAS, which is 1 ÷ your gross margin: 2.0x at a 50% margin, 4.0x at a 25% margin. The 3x to 4x target you often hear is a rule of thumb for typical margins, not a law.
- Is a 2x ROAS good?
- It depends entirely on your margin. At a 50% margin, break-even is 2.0x, so 2x is exactly break-even. A software business at an 80% margin (break-even 1.25x) profits at 2x, while a reseller at a 30% margin (break-even 3.33x) loses money at 2x.
- Is 800% ROAS good?
- An 800% ROAS is the same as 8x: 8 in revenue for every 1 spent, since ROAS is sometimes written as a percentage. That clears break-even for almost any margin, so it is strong. At very high ROAS, watch volume: a high ratio on tiny spend can mean you are under-investing.
- What is the 70/20/10 rule in marketing?
- It is a way to split a budget by risk: about 70% into proven campaigns, 20% into promising tactics you are scaling, and 10% into experiments. It keeps most spend on reliable returns while still funding the testing that finds your next winner. It is a convention, not a formula.