Ad ROI CalculatorHow to calculate ROAS
ROAS = Revenue from ads ÷ Ad spendIf a campaign cost 1,000 and brought in 4,000 in revenue, ROAS = 4,000 ÷ 1,000 = 4. People write it as 4, 4× or 400%. Each means the same thing: every 1 spent on ads brought back 4 in revenue.
With 50 orders, the same campaign has an average order value of 4,000 ÷ 50 = 80 and a cost per order of 1,000 ÷ 50 = 20.
What is a good ROAS?
No single number is “good” for everyone. It depends on your margin. ROAS counts revenue, not profit, so you need to compare it with your break-even ROAS:
Break-even ROAS = 1 ÷ Gross marginWith a 40% gross margin, break-even ROAS is 1 ÷ 0.4 = 2.5. The campaign above, with a ROAS of 4, earns 4,000 × 40% = 1,600 in gross profit. After 1,000 of ad spend, that leaves 600 in profit. At a ROAS of 2, the same campaign would lose money. More on this in the break-even ROAS calculator.
ROAS, ACOS and ROI: what’s the difference?
| Metric | Formula | Example above |
|---|---|---|
| ROAS | Revenue ÷ ad spend | 4× |
| ACOS (ad cost of sales) | Ad spend ÷ revenue | 25% |
| POAS (profit on ad spend) | Gross profit ÷ ad spend | 1.6× |
| ROI / ROMI | (Gross profit − ad spend) ÷ ad spend | 60% |
FAQ
How do you calculate ROAS?
Divide the revenue from ads by the ad spend. 4,000 in revenue from 1,000 in ad spend is a ROAS of 4, often written as 4× or 400%.
What is a good ROAS?
There is no single good number. A ROAS is good when it is above your break-even ROAS, which is 1 divided by your gross margin. With a 40% margin you break even at a ROAS of 2.5; with a 70% margin, at about 1.43.
What is the difference between ROAS and ACOS?
They are the same ratio turned upside down. ROAS is revenue ÷ ad spend; ACOS is ad spend ÷ revenue. A ROAS of 4 equals an ACOS of 25%.
Is ROAS the same as ROI?
No. ROAS uses revenue, ROI uses profit. ROAS does not account for what the goods cost you, so a campaign with a ROAS of 2 can still lose money if your margin is below 50%.