Return on ad spend is revenue divided by advertising spend. A ROAS of 4 means four pounds of revenue for every pound spent on media. It is the standard performance-marketing headline, and on its own it is close to useless, because revenue is not profit and the threshold for a good ROAS depends entirely on the gross margin of what you sold.
That threshold is easy to compute and rarely quoted. Break-even ROAS is one divided by the gross margin: at a 55% margin you need a ROAS of 1.82 simply to cover the cost of goods and the media, before any overhead. At a 25% margin you need 4.0, and at an 80% margin 1.25. Two businesses reporting the same ROAS can therefore be at opposite ends of profitability, which is why this calculator reports the profit-based version alongside.
ROAS also differs from ROI in what it counts. ROAS measures revenue against media spend only; return on investment measures profit against total cost including creative, agency fees and tooling. On the sample entries $58,000 of revenue from $12,500 of media is a ROAS of 4.64, a profit ROAS of 2.55, and after $6,000 of other marketing costs the net contribution is $13,400.
The formula
Revenue- Sales attributed to the advertising
Ad spend- Media cost only
Gross margin- Share of revenue left after cost of goods
Other costs- Creative, agency fees, tools — excluded from ROAS, included in net contribution
How to use this calculator
- Enter the revenue attributed to the campaign.
- Enter the media spend behind it.
- Enter your gross margin so the break-even ROAS can be calculated.
- Add other marketing costs to see the net contribution after everything.
Worked examples
$58,000 of revenue from $12,500 of media
ROAS is 4.64. At a 55% gross margin that revenue carries $31,900 of gross profit, a profit ROAS of 2.55, comfortably above the 1.82 break-even the margin demands.
Why the same ROAS means different things
A ROAS of 4.64 at a 25% margin gives gross profit of $14,500 against $12,500 of media — a loss of $-2,000. At 55% it is a $19,400 gain. The ROAS figure is identical; only the margin has changed.
How to read your score
Frequently asked questions
What ROAS should I aim for?
Whatever exceeds one divided by your gross margin, plus enough to cover overhead. At a 50% margin the floor is 2.0; at 20% it is 5.0. A universal "4x is good" target ignores the only variable that decides the answer.
What is the difference between ROAS and ROI?
ROAS compares revenue with media spend. ROI compares profit with total investment, including creative, agency fees, tools and staff. ROI is always the lower number and the more honest one.
Should ROAS use first-purchase or lifetime revenue?
Say which. First-purchase ROAS is verifiable and conservative; lifetime ROAS justifies higher bidding but depends on a retention assumption. Reporting the second while implying the first is how acquisition budgets get overspent.
Why does platform-reported ROAS exceed my accounts?
Attribution windows and view-through credit mean platforms claim sales that would have happened anyway. Compare total revenue against total spend at the account level as a sanity check on the campaign-level figures.
ROAS reference
| Gross margin | Break-even ROAS | ROAS for a 20% net contribution | Gross profit per $1 of media at 4.6 ROAS |
|---|---|---|---|
| 15% | 6.67 | 8.33 | $0.70 |
| 25% | 4.00 | 5.00 | $1.16 |
| 40% | 2.50 | 3.12 | $1.86 |
| 55% | 1.82 | 2.27 | $2.55 |
| 70% | 1.43 | 1.79 | $3.25 |
| 85% | 1.18 | 1.47 | $3.94 |
Break-even ROAS is the reciprocal of the gross margin. Everything above it is contribution towards overhead.
| Attributed revenue | spend $5000 | spend $8000 | spend $12500 | spend $25000 | spend $60000 |
|---|---|---|---|---|---|
| revenue $15000 | 3.00 | 1.88 | 1.20 | 0.60 | 0.25 |
| revenue $30000 | 6.00 | 3.75 | 2.40 | 1.20 | 0.50 |
| revenue $58000 | 11.60 | 7.25 | 4.64 | 2.32 | 0.97 |
| revenue $120000 | 24.00 | 15.00 | 9.60 | 4.80 | 2.00 |
| revenue $250000 | 50.00 | 31.25 | 20.00 | 10.00 | 4.17 |
Media spend only. Including agency and creative costs lowers every cell.