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ROAS Calculator
Return on ad spend, ROI, and reverse target spend.
What is ROAS?
Return on ad spend (ROAS) is the revenue generated for every unit of currency spent on advertising. It's the ratio that tells media buyers whether the channel is paying for itself. A 4:1 ROAS means every $1 spent brought back $4 in revenue. ROAS is a top-line metric, not a profit metric — to know if a campaign is profitable you also need product margin, fulfilment cost and overhead. Many companies set a target ROAS that already bakes those costs in: above target the campaign scales; below target, it gets paused or restructured.
How to use this calculator
Forward mode computes ROAS from spend and revenue. Reverse mode answers the planning question: how much can I spend?
- Pick forward or reverse mode.
- In forward mode, enter ad spend and the revenue attributed to that spend.
- In reverse mode, enter your target revenue and the ROAS you want to hit.
- Compare the result with the tier table below.
Formulas
ROAS is a ratio (revenue ÷ spend). ROI is a percentage of profit. The reverse formula is the same equation rearranged.
ROAS = Revenue from ads ÷ Ad spend
ROI % = ( ( Revenue from ads − Ad spend ) ÷ Ad spend ) × 100
Spend ceiling = Target revenue ÷ Target ROAS (e.g. 4 = 4:1)
ROAS tiers and what they mean
Tier interpretation depends on your gross margin. Subscription businesses can live on a 2:1; low-margin retail often needs 6:1 to break even.
| Tier | ROAS | What it usually means |
|---|---|---|
| Unprofitable | < 1:1 | Spending more than you earn — pause and audit attribution. |
| Breakeven / thin margin | 1:1 — 2:1 | Covers ad cost only; no margin for product or operations. |
| Healthy | 3:1 — 4:1 | Standard target for most ecommerce; comfortable margins. |
| Strong | 5:1 — 7:1 | Above target — likely room to scale spend. |
| Exceptional | 8:1+ | Either undermarketed or measuring lift incorrectly. Investigate. |
Tiers assume retail / DTC defaults; adjust to your business.
Frequently asked questions
ROAS vs ROI — what's the difference?
ROAS is a revenue ratio (revenue ÷ spend). ROI is a profit ratio ((profit ÷ spend) × 100). ROAS doesn't include product cost; ROI does. Most ad teams optimize for ROAS; finance teams care about ROI.
What target ROAS should I use?
Set it so that revenue × gross margin > ad spend. If your margin is 25%, breakeven ROAS is 4:1, so target 5:1 or higher to actually profit.
Why does my ROAS drop when I scale?
Auctions get more competitive as you broaden audiences and creatives saturate. Plan for 10–25% ROAS decay when doubling budget; refresh creatives and segment audiences to soften the drop.
How do I read a 1.5:1 ROAS?
For every 1 unit spent, 1.5 came back. Whether that's good depends entirely on margin: a 70%-margin SaaS thrives at 1.5:1; a 20%-margin retailer is bleeding.
Should I include taxes and shipping in revenue?
No. Use net revenue (excluding taxes and shipping pass-through) so the ratio reflects actual money you keep before product cost.
What does the reverse mode do?
It answers the planning question: 'If I want X in revenue at Y ROAS, how much can I spend?' The answer is X ÷ Y. It's a quick budget guard-rail before launching.