Profitability verdictIs your ROAS actually making money? Compare it to your break-even.
Enter your actual ROAS and your break-even ROAS — or pull them in from the tabs above — to see whether your campaign is making money.
All calculations run in your browser — nothing you type is sent anywhere or stored. ROAS measures revenue against ad spend only; judge it against your break-even before you decide a campaign is working.
Work out your return on ad spend (ROAS) in seconds, then check the number that actually decides whether you make money: your break-even ROAS. Enter any two of revenue, ad spend or ROAS and the calculator solves for the third — then the verdict panel tells you, in plain English, whether your campaign is profitable or quietly losing money. Free, no sign-up, runs entirely in your browser.
What Is ROAS?
ROAS stands for return on ad spend — the revenue your advertising brings back for every dollar you put into it. It is the headline efficiency metric for paid advertising on Google Ads, Meta, Amazon and every other channel, because it answers the first question any advertiser asks: is money coming in faster than it is going out? A campaign that earns $10,000 from $2,000 of ad spend has a 5:1 ROAS — five dollars of revenue for every dollar spent. It is one of the core advertising metrics marketers compare across channels to decide where the next slice of the budget should go. The one thing ROAS does not measure is profit, which is why we pair it with break-even ROAS below.
The ROAS Formula
The ROAS formula divides the revenue from a campaign by what you spent on it:
ROAS = revenue ÷ ad spend
Spend $2,000 on an ad campaign that returns $10,000 in revenue and your ROAS is 10,000 ÷ 2,000 = 5. That single number reads three equivalent ways, and the calculator above shows all three at once:
- As a ratio: 5:1 — five dollars back for every one spent.
- As a percentage: 500% — multiply the ratio by 100.
- As revenue per dollar: $5.00 per $1 spent.
The same equation rearranges, which is why the tool lets you solve for any value: enter revenue and spend to get ROAS, enter ROAS and spend to find the revenue you need, or enter ROAS and a revenue target to find the spend it allows. One rule keeps the number honest — use the revenue attributed to the ads, not your total store revenue, or ROAS will flatter a campaign that did very little.
How to Calculate ROAS — Step by Step
- Find the revenue from your ads. Pull the revenue attributed to the campaign in your ad platform or analytics — say $10,000.
- Find your ad spend. Take what you paid the platform for that campaign — say $2,000.
- Divide revenue by ad spend. 10,000 ÷ 2,000 = 5, a 5:1 ROAS (500%).
- Compare it to your break-even ROAS. This is the step most calculators skip — and the one that tells you whether 5:1 is good or not. More on that below.
Is a High ROAS Good? (Why the Number Alone Can Mislead)
Not necessarily — and this is the single most expensive misunderstanding in paid advertising. ROAS compares revenue to ad spend only. It is completely blind to the cost of the product you sold, your shipping, your payment fees and your overhead. That means a ROAS that looks healthy can still be losing you money on every order.
Picture two stores running the identical campaign at a 4:1 ROAS. The first sells a digital product with a 90% profit margin: 4:1 is wildly profitable. The second sells physical goods where product, shipping and fees eat 80% of revenue, leaving a 20% margin: that store needs a 5:1 ROAS just to break even, so its “good” 4:1 is bleeding cash. Same ROAS, opposite outcomes. The number is only meaningful next to your costs — which is exactly why the next section, not this one, is the one that protects your budget.
Break-Even ROAS — The Number That Actually Matters
Break-even ROAS is the return on ad spend at which a campaign makes exactly zero profit. Below it you lose money on every sale; above it you keep money. It is the floor every profitable campaign has to clear, and it comes straight from your profit margin. Switch the calculator above to the Break-Even ROAS tab to work out yours — either quickly from a margin you already know, or in full from your per-order unit economics.
The Break-Even ROAS Formula
Break-even ROAS = 1 ÷ profit margin
If you keep 25 cents of profit on every dollar of revenue — a 25% margin — your break-even ROAS is 1 ÷ 0.25 = 4:1. You need to earn four dollars of revenue per dollar of ad spend just to cover costs. The lower your margin, the higher the ROAS you need to survive, which is why margin, not a generic benchmark, is the real driver of what counts as a good ROAS.
Profit Margin → Break-Even ROAS Table
Because break-even ROAS is simply 1 ÷ margin, you can read it straight off this table. It is pure arithmetic, so it holds for any business in any industry:
| Profit margin | Break-even ROAS | What that means |
|---|---|---|
| 10% | 10:1 | You need $10 back per $1 spent just to break even — very hard. |
| 20% | 5:1 | A 4:1 ROAS still loses money here. |
| 25% | 4:1 | The figure most “good ROAS” advice quietly assumes. |
| 33% | 3:1 | Comfortable for many service businesses. |
| 50% | 2:1 | High-margin: even a 3:1 ROAS is solidly profitable. |
For e-commerce, work the margin out from your unit economics rather than guessing it. The break-even tab’s unit-economics mode takes your average order value, product cost, shipping, payment fee and any other per-order costs, computes your net profit per order and margin, and turns that into your break-even ROAS automatically.
Target ROAS — Setting a Profitable Goal
Break-even is the floor; target ROAS is where you actually want to operate. It is the ROAS that leaves the profit you want after ad spend, and it has its own formula:
Target ROAS = 1 ÷ (1 − target profit margin)
If you want to keep 20% of revenue as profit after paying for ads, your target ROAS is 1 ÷ 0.80 = 5:1. This is the number to feed a target ROAS automated bidding strategy in Google Ads or Meta: set it above your break-even and the platform optimises bids to clear your profit goal rather than just covering costs. Setting a target without first knowing your break-even is how advertisers end up scaling a campaign that was never profitable in the first place.
ROAS vs ROI vs ACoS — What’s the Difference?
These three metrics get used interchangeably and they should not be. Each compares return to a different cost, so each answers a different question:
| Metric | Formula | What it measures | Best for |
|---|---|---|---|
| ROAS | revenue ÷ ad spend | Top-line ad efficiency (ignores product cost) | Judging a campaign day to day |
| ROI | (profit − total cost) ÷ total cost | Whether the whole effort made money | Checking real profitability |
| ACoS | ad spend ÷ revenue | Share of revenue eaten by ads (inverse of ROAS) | Amazon advertising |
ROAS and ACoS are exact inverses — ACoS = 1 ÷ ROAS — so a 4:1 ROAS is the same as a 25% ACoS. Google and Meta advertisers think in ROAS (higher is better); Amazon sellers think in ACoS (lower is better). ROI is the broader truth-teller: because it counts every cost, a campaign can post a strong ROAS and a negative ROI when the product margin is thin. For the full ROI calculation worked through for small budgets, see the marketing ROI formula small businesses most often get wrong. And if you need the upstream cost metrics behind a click — CPM, CPC and CPA — our CPM, CPC and CPA calculator handles those.
What Is a Good ROAS? (A Rule of Thumb, Honestly Hedged)
You will see a good ROAS quoted as roughly 3:1 to 4:1 for e-commerce, and as a starting orientation that is reasonable — it is the figure most marketers reach for. But treat it as a placeholder, not a target. As the table above shows, a 4:1 ROAS is comfortable at a 25% margin and a disaster at a 10% one. A widely repeated benchmark cannot know your costs; only your break-even can. Channel matters too: a direct-response campaign should clear your break-even with room to spare, while a brand-awareness or e-commerce top-of-funnel campaign may justify a lower ROAS because it seeds sales that close later. The dependable rule is simple — calculate your break-even from your margin, set a target above it, and measure ROAS alongside the other key metrics for small business ad spend rather than in isolation. Before you commit more budget to paid channels, it is also worth confirming your measurement is trustworthy with our guide to free vs paid analytics.
The 3:1–4:1 figure is a widely cited industry rule of thumb (referenced by Google Ads guidance and marketing-benchmark publishers such as WordStream / LocaliQ); it varies enormously by profit margin, channel and business model. Always validate it against your own break-even ROAS rather than adopting it as a goal.
Frequently Asked Questions
What is ROAS?
ROAS stands for return on ad spend. It is the amount of revenue your advertising generates for every dollar you spend on it — a direct read on whether a campaign is pulling its weight at the top line. A ROAS of 5:1 means every $1 of ad spend brought back $5 in revenue. It is the headline efficiency metric for performance advertising on Google Ads, Meta, Amazon and every other paid channel, because it answers the first question any advertiser asks: is this campaign making money come in faster than it goes out? ROAS is usually written as a ratio (5:1), a percentage (500%) or as revenue per dollar ($5 per $1 spent) — all three say the same thing. The one thing it does not measure is profit, which is why break-even ROAS matters just as much as the raw number.
How do you calculate ROAS?
ROAS is your revenue from advertising divided by your ad spend: ROAS = revenue ÷ ad spend. If a campaign generated $10,000 in revenue from $2,000 in ad spend, your ROAS is 10,000 ÷ 2,000 = 5, usually written 5:1. To express it as a percentage, multiply by 100 — a 5:1 ROAS is 500%. To express it as revenue per dollar, the ratio is already the answer: $5 per $1 spent. The formula rearranges two ways, which is why the calculator on this page solves for any value: enter revenue and spend to get ROAS, enter ROAS and spend to find the revenue you need, or enter ROAS and a revenue target to find the spend it allows. Use the actual revenue attributed to the campaign, not total store revenue, or the number will flatter you.
What is a good ROAS?
There is no single good ROAS — the honest answer is that it depends entirely on your profit margin. A widely cited rule of thumb is around 3:1 to 4:1 for a healthy e-commerce campaign, but that benchmark is meaningless without your costs. A business with a 50% margin breaks even at a 2:1 ROAS, so 3:1 is comfortably profitable; a business with a 10% margin breaks even at 10:1, so the same 3:1 ROAS is losing money on every sale. The right way to judge a "good" ROAS is to calculate your break-even ROAS from your margin, then set a target above it that leaves the profit you want. Brand-awareness campaigns can also justify a lower ROAS than direct-response ones. Start from your own break-even, not an industry average.
What is break-even ROAS and how do you calculate it?
Break-even ROAS is the return on ad spend at which a campaign makes exactly zero profit — the floor below which you lose money on every sale. You calculate it from your profit margin: break-even ROAS = 1 ÷ profit margin. If your profit margin is 25%, your break-even ROAS is 1 ÷ 0.25 = 4, meaning you need a 4:1 ROAS just to cover costs. At a 20% margin it is 5:1; at a 50% margin it is only 2:1. The lower your margin, the higher the ROAS you need to survive, which is exactly why two businesses can run the same campaign and one profits while the other bleeds. For e-commerce with per-order costs, work the margin out from your unit economics — average order value minus product cost, shipping, payment fees and other costs — then divide one by it. That is what the break-even tab on this calculator does.
What is the difference between ROAS and ROI?
ROAS and ROI both measure return, but on different denominators. ROAS = revenue ÷ ad spend — it compares revenue to advertising cost only, so it is a top-line efficiency number. ROI (return on investment) = (profit − total cost) ÷ total cost — it compares profit to every cost involved, including the product, fulfilment, overhead and the ad spend. That difference matters: a campaign can have a strong ROAS and a negative ROI if the product margin is thin, because ROAS ignores the cost of what you sold. ROAS tells you whether the advertising is efficient; ROI tells you whether the whole effort actually made money. Most advertisers watch ROAS day to day because it is fast to compute per campaign, then check ROI periodically to confirm the business is genuinely profitable. For the full ROI calculation, see our marketing ROI formula guide.
What is the difference between ROAS and ACoS?
ROAS and ACoS are the same relationship read in opposite directions, and ACoS is the term Amazon advertisers use. ROAS = revenue ÷ ad spend, so a higher number is better. ACoS (advertising cost of sale) = ad spend ÷ revenue, expressed as a percentage, so a lower number is better. They are exact inverses: a 4:1 ROAS is a 25% ACoS, a 5:1 ROAS is a 20% ACoS, and in general ACoS = 1 ÷ ROAS. If your Amazon ACoS target is 25%, that is the same as targeting a 4:1 ROAS. Google and Meta advertisers tend to think in ROAS; Amazon sellers think in ACoS because it maps neatly onto the share of revenue eaten by advertising. Both ignore product cost, so on either platform you still need to check the figure against your break-even.
What is target ROAS in Google Ads?
Target ROAS is an automated bidding strategy in Google Ads (and a similar option in Meta) where you tell the platform the return you want and it adjusts bids in real time to hit it on average. If you set a target ROAS of 400%, Google bids more aggressively on auctions likely to convert profitably and pulls back on those unlikely to clear 4:1. The right target is not a guess: start from your break-even ROAS — 1 ÷ profit margin — and set the target above it so the campaign clears your profit goal. The target-ROAS formula for a desired profit margin is 1 ÷ (1 − target margin); if you want to keep 20% of revenue as profit after ad spend, your target ROAS is 1 ÷ 0.80 = 1.25× your break-even. Target-ROAS bidding needs enough conversion history to work; below roughly 15 conversions a month it tends to be unstable.
Why can a high ROAS still mean you’re losing money?
Because ROAS measures revenue against ad spend only — it is blind to the cost of the product you sold. A 4:1 ROAS looks healthy, but if your product, shipping and payment fees eat 80% of revenue, your break-even ROAS is 5:1, so that "good" 4:1 is losing money on every order. This is the trap statscheap exists to help you avoid: a number that feels successful can quietly drain the budget. The fix is to judge ROAS against your break-even, not against an industry average. Calculate break-even ROAS = 1 ÷ profit margin, compare your actual ROAS to it, and only then decide whether a campaign is winning. The verdict panel on this calculator does exactly that — enter your ROAS and your costs and it tells you whether you are above or below the line where you start keeping money.