ROAS Calculator
Enter revenue from ads, what you spent and your margin. You get ROAS, the break-even ROAS and your profit after ad spend, and what you need to hit a profit goal.
Worked examples
£1,000 of ads, £5,000 of sales
Revenue £5,000, spend £1,000, margin 40%, profit goal £1,500
ROAS 5.00, break-even ROAS 2.50, profit after ad spend £1,000. To make £1,500 you need £6,250 of revenue, a ROAS of 6.25.
Gross profit is 40% of £5,000, which is £2,000, less £1,000 of ads.
About ROAS Calculator
Return on ad spend, or ROAS, is the revenue you make for each pound spent on advertising. A ROAS of 5 means £5 of sales for every £1 of ads. It looks simple, but whether a given figure is good depends entirely on your margin. If you keep 40p of each £1 sold, you need a ROAS of 2.5 just to cover the ads, before any other cost.
Enter the revenue from your ads, what you spent and your gross margin. The calculator shows ROAS, the advertising cost of sales (spend as a share of revenue), the break-even ROAS (one divided by your margin) and the profit left after ad spend. If you give a profit goal, it works out the revenue and the ROAS you need to reach it at the same spend. A short note tells you whether the ads are making or losing money.
How to use ROAS Calculator
- Enter the revenue that came from the ads.
- Enter the ad spend for the same period.
- Enter your gross margin, which is the share of the price left after the cost of the goods.
- Optionally enter a profit goal. Read the ROAS, break-even ROAS and profit.
Common uses
- Judging whether an advert is profitable
- Setting a target ROAS for an agency
- Comparing products with different margins
- Working out how much revenue a campaign needs
Frequently asked questions
How is ROAS calculated?
Divide the revenue from the ads by the spend on them. £5,000 of revenue from £1,000 of ads is a ROAS of 5, which is often written as 5 to 1 or 500%.
What is break-even ROAS?
It is the ROAS at which your gross profit exactly covers the ads. It equals one divided by your margin, so a 40% margin gives 2.5. Above it, the ads make money before overheads.
What is advertising cost of sales?
It is the spend as a share of revenue, the opposite way round from ROAS. A ROAS of 5 is a cost of sales of 20%.
Which margin should I use?
Use the margin on those sales before advertising: the price minus the cost of the goods, delivery and fees, divided by the price. Do not include the ad spend.
Is a high ROAS always good?
Not always. A very high ROAS may mean you are only reaching people who would have bought anyway, and spending more could add profitable sales. Look at profit as well as the ratio.