Free tool
ROAS calculator
Enter your ad spend, the revenue it generated and your gross margin. See your ROAS, your break-even ROAS, and how much gross profit each dollar of ad spend generates.
Your ROAS
4.00x
Revenue divided by ad spend
Break-even ROAS
1.67x
The ROAS your margin needs just to stand still
Profit on ad spend
2.40x
Gross profit divided by ad spend
Gross profit
$12,000
Revenue × margin
Profit after ad spend
$7,000
+1.40 per $1 spent
Above break-even: there is room to scale
A directional read. Real profitability also depends on repeat purchase rate, returns and overheads.
How to read a ROAS number
ROAS is revenue divided by ad spend. A 4x ROAS means every dollar returned four dollars of revenue. Revenue is not profit, so the number only means something next to your margin: at a 25% margin, a 4x ROAS is exactly break-even, while at a 70% margin the same 4x is comfortably profitable.
Your break-even ROAS changes only when your margin changes. It is calculated as 1 divided by your gross margin. At a 60% margin, break-even ROAS is always 1.67x. At 40%, it is 2.50x. Changing your spend or revenue changes your actual ROAS; changing your margin changes the threshold your ROAS needs to clear.
That is why break-even ROAS is more useful than chasing an arbitrary target. It tells you the minimum return your advertising needs to generate for the economics to work. Once you know that number, the more useful question is not simply “What ROAS should we aim for?” but “What can we afford to pay to acquire a customer?”
Want that ROAS to hold at scale?
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