ROAS calculator
ROAS is revenue divided by ad spend. On its own the number means nothing: a 3.0 ROAS is excellent at a 60 percent margin and loss-making at 25 percent. This calculator returns your ROAS alongside the break-even ROAS your margin requires, which is the comparison that decides whether to scale.
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The formula
ROAS = revenue / ad spend
Break-even ROAS = 1 / gross margin
The second line is why a target ROAS copied from someone else's account is useless. At a 45 percent margin you break even at 2.22x. At 25 percent you need 4.0x for the same outcome, and a 3.0x that one advertiser celebrates is the one that quietly bankrupts another.
| Gross margin | Break-even ROAS |
|---|---|
| 70% | 1.43x |
| 60% | 1.67x |
| 50% | 2.00x |
| 45% | 2.22x |
| 35% | 2.86x |
| 25% | 4.00x |
| 15% | 6.67x |
How to read the result
- Headroom matters more than the raw figure. A 2.3x against a 2.22x break-even is one CPM rise away from unprofitable.
- This is gross margin, not net. If you are also paying for fulfilment, support and returns, use contribution margin and the break-even target moves up.
- ROAS is attribution-dependent. A platform-reported figure and your own backend figure will differ, and the backend one is the one that pays salaries.
What people get wrong
- Setting a target ROAS without computing break-even from your own margin.
- Comparing platform-reported ROAS to a competitor's number, when the attribution windows almost certainly differ.
- Optimising ROAS upward by shrinking spend. A 6x on €2,000 usually makes less money than a 2.5x on €40,000.
- Using gross margin when returns and shipping are material, which flatters the break-even target.
Frequently asked questions
How do you calculate ROAS?
Divide revenue attributed to advertising by the amount spent on advertising. €42,000 of revenue on €12,000 of spend is a 3.5x ROAS.
What is a good ROAS?
The only honest answer is: above your break-even, which is 1 divided by your gross margin. At a 45 percent margin break-even is 2.22x, so 3.5x is healthy. At a 25 percent margin the same 3.5x loses money.
Why is my platform ROAS higher than my real ROAS?
Attribution. Ad platforms count conversions inside their own click and view windows and will claim credit your backend does not. Use the backend figure for decisions and the platform figure only for comparing creatives against each other.