Calculate return on ad spend from revenue and ad cost.
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How do you calculate return on ad spend (ROAS)?
ROAS = revenue ÷ ad spend, often shown as a ratio (4:1) or a percentage (400%). For example, 5,000 revenue from 1,000 spend is a ROAS of 5, or 500%. ROAS measures gross revenue, not profit, so factor in product and overhead costs separately when assessing campaign performance.
Understanding your result
ROAS measures gross revenue, not profit; factor in product and overhead costs separately.
Formula and method
ROAS = revenue ÷ ad spend. It is often shown as a ratio (4:1) or a percentage (400%).
Assumptions and limitations
ROAS counts gross revenue, not profit. A campaign can show a high ROAS yet lose money once product, shipping and overhead costs are included.
Worked example
5,000 revenue from 1,000 spend is a ROAS of 5 (500%).
How it compares
| Profit margin | Approx. break-even ROAS |
|---|---|
| 20% | 5× |
| 33% | 3× |
| 50% | 2× |
How to use this tool
- Enter the revenue attributed to ads.
- Enter the ad spend.
Common mistakes to avoid
- Confusing ROAS (revenue based) with ROI (profit based).
About the ROAS Calculator
Return on ad spend (ROAS) shows how much revenue each unit of ad spend generated.
Who should use this tool
Advertisers and marketers measuring the efficiency of paid campaigns on any channel.
Benefits
- See revenue generated per unit of ad spend.
- Read the result as a ratio or a percentage.
- Compare campaigns and channels quickly.
Practical use cases
- Judging whether a campaign is worth scaling.
- Comparing two ad platforms.
- Setting a minimum acceptable ad return.
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Frequently asked questions
What is a good ROAS?
It varies by margin; many businesses target 3–4× or higher to stay profitable.
Why is ROAS not the same as profit?
ROAS compares revenue to ad spend only, ignoring product costs, shipping, overheads and other expenses. A campaign can show a strong ROAS yet still lose money once those costs are counted. Use ROAS to judge advertising efficiency, then check profit separately before drawing conclusions.
How do I read a ROAS shown as a ratio versus a percentage?
A ROAS of 5 means five units of revenue per unit of spend, the same as 500%. The ratio and percentage describe the identical result in different forms. Pick whichever your team uses consistently so figures across campaigns remain directly comparable.