Whatever clears your gross margin, which means the answer is a different number for every business. At a 40% margin, revenue of 2.5 times ad spend only breaks even. Quoting a ROAS target without a margin is quoting half of a ratio.

How is ROAS different from ROI?

ROAS divides revenue by ad spend and ignores every other cost. ROI works on profit and counts them all. A campaign can have an excellent ROAS and lose money, which is the most common way advertising reporting flatters itself.

Businessmarketing

ROAS Calculator

Return on ad spend, plus the break-even ROAS your margin actually requires. A 4× ROAS is a loss at a 20% margin.

Also called: return on ad spend calculator, ad revenue ratio.

ROAS

4×. Every unit of ad spend returned 4 of revenue. On a 25% margin the break-even ROAS is 4×.

ROAS as a percentage

400%

Break-even ROAS at your margin

How this is calculated

Method and background

How this is calculated

Revenue over spend. The number that matters is not ROAS itself but ROAS against your break-even, which is one divided by gross margin. At a 25% margin you need 4× just to stand still, so a campaign at 3.5× is destroying money while looking healthy.

roas = revenue / ad_spend; breakeven = 1 / gross_margin

R: Revenue attributed to the campaign (currency)
S: Ad spend (currency)
GM: Gross margin as a decimal (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

4x ROAS

Revenue attributed to the campaign: $400,000.00
Ad spend: $100,000.00
Gross margin: 100%

ROAS4

arithmetic identity

Open this example

break-even at a 25% margin is 4x

Revenue attributed to the campaign: $400,000.00
Ad spend: $100,000.00
Gross margin: 25%

ROAS4

a 4x ROAS exactly breaks even at a 25% margin

Open this example

zero spend

Revenue attributed to the campaign: $400,000.00
Ad spend: $0.00
Gross margin: 100%

ROAS0

degenerate case

Open this example

Frequently asked questions

What is a good ROAS?: Whatever clears your gross margin, which means the answer is a different number for every business. At a 40% margin, revenue of 2.5 times ad spend only breaks even. Quoting a ROAS target without a margin is quoting half of a ratio.
How is ROAS different from ROI?: ROAS divides revenue by ad spend and ignores every other cost. ROI works on profit and counts them all. A campaign can have an excellent ROAS and lose money, which is the most common way advertising reporting flatters itself.