ROAS Calculator (Return On Ad Spend)

Q: What is a good ROAS by Industry?

For E-commerce, a 400% (4:1) ROAS is standard for growth. For Dropshipping, aim for 250-300% due to lower margins. SaaS businesses often target lower initial ROAS (0.8-1.5) due to high Lifetime Value (LTV).

Q: How do I calculate Break-Even ROAS?

The formula is 1 / (Profit Margin %). For example, if your profit margin is 20%, your Break-Even ROAS is 5.0 (500%). Anything below this means you are losing money.

Q: What is the difference between ROAS and ROI?

ROAS measures revenue generated per ad dollar (Efficiency). ROI measures net profit after deducting COGS and all expenses (Profitability). You can have a positive ROAS but a negative ROI.

Q: My ROAS is too low. How do I fix it?

Diagnose the funnel: 1) Low CTR means bad ads. 2) High clicks but no sales means a bad landing page. 3) Low revenue means you need to increase Average Order Value (AOV) with bundles.

ROAS Calculator

Enter your revenue and cost to calculate your Return On Ad Spend.

Revenue from Ad Campaign ($)

Total Ad Spend ($)

Calculate Net Profit?

Understand This Metric

ROAS is a top-level KPI. Use our advanced tools to see which funnel stages contribute to your final ROAS.

How to Calculate ROAS (Step-by-Step)

Calculating Return On Ad Spend is straightforward, but accuracy is key. You simply divide the total revenue generated by your ads by the total amount spent on those ads.

The Formula:

ROAS = (Revenue / Ad Spend) × 100

A Real-World Example:

Imagine you spent $2,000 on a Facebook Ads campaign last month. Through pixel tracking, you see that this campaign generated $10,000 in sales.

Step 1: Take your Revenue ($10,000)
Step 2: Divide by Ad Spend ($2,000)
Step 3: Result is 5 (or a 5:1 Ratio)
Final: Multiply by 100 to get percentage = 500% ROAS

Pro Tip: Ensure you are using "Gross Revenue" (total sales value) for this calculation. Do not subtract product costs yet—that calculation is for ROI, not ROAS.

FAQs

What is a "Good" ROAS by Industry? (Benchmarks 2025)

Context is everything. A 400% ROAS is great for high-margin SaaS but terrible for low-margin dropshipping. Here are the current standards:

Industry	Target ROAS	Why?
E-commerce (Brand)	4.0 (400%)	Standard "growth" target for healthy margins.
Dropshipping	2.5 - 3.0	Requires higher volume due to lower margins.
SaaS (B2B)	0.8 - 1.5	Focus is on Lifetime Value (LTV), not immediate profit.

Note: If your ROAS is consistently below 2.0, your funnel likely needs an audit.

How do I calculate Break-Even ROAS?

Your Break-Even ROAS is the point where you neither make nor lose money. Do not launch a campaign without knowing this number.

Formula: 1 / (Profit Margin %)

Example: If you sell a product for $100 and your costs (product + shipping + fees) are $80, your margin is 20% ($20).

Calculation: 1 / 0.20 = 5.0
Result: You need a 500% ROAS just to break even.

What is the difference between ROAS and ROI?

ROAS measures ad efficiency (Revenue / Ad Spend).
ROI measures business profitability (Net Profit / Total Investment).

ROAS ignores costs like goods sold (COGS), shipping, and agency fees. You can have a positive ROAS (e.g., 300%) but a negative ROI if your profit margins are thin. Use ROAS for daily ad optimization and ROI for monthly business health checks.

What does a 300% ROAS mean?

A 300% ROAS (or 3x) means that for every $1 you spend on advertising, you generate $3 in revenue. Remember: this is revenue, not profit.

My ROAS is too low. How do I fix it?

A low ROAS usually points to a specific "leak" in your funnel. Use this diagnostic checklist to find the bottleneck:

Symptom	Probable Cause	The Fix
Low Click-Through Rate (CTR)	Your ad is boring or targets the wrong people.	Test new ad creatives (hooks/images) or refine your audience targeting.
High Clicks, No Sales	Your landing page is confusing, slow, or untrustworthy.	Optimize page speed, improve product descriptions, and simplify the checkout.
Many Sales, Low Revenue	Average Order Value (AOV) is too low.	Add upsells, bundles, or "Buy 2 Get 1" offers to increase transaction value.

Tip: Fix the click first (Ad), then the conversion (Site), then the value (Offer).

Key Terms for this Calculator

Return On Ad Spend (ROAS)

A percentage representing the gross revenue generated for every dollar spent on advertising. It is the primary metric for ad efficiency.

Revenue from Ad Campaign

The total income (gross sales) generated directly from the tracked advertising campaign. This is not profit, just sales volume.

Total Ad Spend

The total amount paid to the advertising platform (Google, Meta, TikTok) to run the specific campaign being analyzed.

Break-Even ROAS

The specific ROAS number where your campaign covers all costs (product, shipping, fees) but makes $0 profit. Any ROAS above this number is profit.

Return On Investment (ROI)

Unlike ROAS (which looks at revenue), ROI measures the actual net profit generated after deducting the Cost of Goods Sold (COGS) and other expenses.

Average Order Value (AOV)

The average amount a customer spends in a single transaction. Increasing your AOV (via bundles or upsells) is the fastest way to improve ROAS.