Free tool
ROAS calculator
Revenue divided by ad spend is the ratio everyone quotes, and on its own it cannot tell you whether the campaign made money. Add your margin and the page shows the break-even ROAS for your business and the profit left after the ads are paid, which is the figure that decides whether to spend again. Nothing you type leaves your browser.
Your return on ad spend
- ROAS
- 4.0x
- Revenue per unit of spend
- 400%
- Break-even ROAS at your margin
- 2.5x
- Profit after the ads are paid
- 600
Why the ratio on its own misleads
Return on ad spend is revenue divided by spend, so a campaign that spent one thousand and produced four thousand has a ROAS of four. That sounds like a success and it may not be one. If delivering those sales cost three thousand two hundred, the campaign returned eight hundred against a thousand spent and lost money. The break-even ROAS is the ratio at which the campaign returns exactly what it cost, and it is one divided by the gross margin: at 25% the break-even is four, at 40% it is two and a half, at 60% about 1.7.
That is why the page asks for the margin and shows the profit after ads rather than stopping at the ratio. The profit figure is revenue times margin minus spend, and it is the only number here that says whether to spend again. A ROAS above break-even with a small profit means the campaign works and the scale is wrong; a ROAS below it means the campaign does not work at any scale until something changes.
Two cautions. The revenue has to be the revenue the ads produced, not the month's takings, or customers who would have come anyway make every campaign look good. And a campaign that breaks even on the first sale can still be worth running if customers come back, which is what the customer value input on the ROI calculator is for.
The same sums for search
Paid clicks stop when the spend stops. The SEO ROI calculator runs the same chain for organic visits, which keep arriving after the work is done, and the CPC calculator shows what each paid click costs and what it has to be worth. If the margin is the problem, the break-even calculator comes first.
Questions about ROAS
What is a good ROAS?
One above your break-even, which is one divided by your gross margin. A business keeping 25% of each sale after the cost of delivering it breaks even at a ROAS of four; one keeping 60% breaks even at about 1.7. A published "good ROAS" that ignores the margin is describing somebody else’s business.
What is the difference between ROAS and ROI?
ROAS is revenue divided by ad spend and says nothing about what the sales cost you to deliver. ROI takes the costs out first and divides the profit by the spend. A campaign can have a ROAS of three and a negative ROI at the same time, which is why this page shows the profit after ads beside the ratio.
Which revenue do I count?
The revenue the ads can be shown to have produced, from your ad platform’s conversion tracking or from asking customers how they found you, over the same period as the spend. Counting all revenue in a month against the ad spend in that month gives a flattering ratio that includes the customers who would have come anyway.
My ROAS is below break-even. What do I change?
One thing at a time. The usual levers are the keywords and audiences that spend without converting, the landing page (which the conversion rate calculator on this site is for), and the offer. If the margin itself is the problem, no amount of ad work fixes it, and the break-even calculator is the page to read first.
Is anything I type here sent anywhere?
No. Everything happens in your browser. There is no form submission, no analytics event and no network request of any kind, which you can confirm in your browser’s network tab.
Book a call with us
A 30-minute call in your working hours. Tell us what you sell and where, and we will tell you what we would do first and what it involves. Prefer email? Send your website through the form and the Passieon Team will reply within two working days.