How to calculate ROAS
ROAS = attributed revenue ÷ advertising spend
Divide the revenue attributed to a campaign by its advertising spend. Multiply the ratio by 100 to express it as a percentage. A 4× ROAS means each 1 spent on ads is associated with 4 in revenue. It does not mean 4 in profit.
Worked example
A store spends 3,000 on ads and records 12,000 in attributed revenue. Its ROAS is 12,000 ÷ 3,000 = 4×, or 400%. Revenue less ad spend is 9,000, before product, shipping, payment and operating costs.
Is your ROAS high enough?
The answer depends on the contribution margin of what you sell. If your pre-ad contribution margin is 30%, your break-even ROAS is about 3.33×. A 4× campaign would clear those modeled variable costs; fixed overhead could still leave the business unprofitable.
Use the break-even ROAS calculator to find your own threshold. Avoid using an industry-wide target without checking your costs and returns.
Read the result without double-counting revenue
Keep currency, dates and attribution settings consistent. If two ad platforms both claim the same sale, adding their reported revenue can inflate your blended result. Delayed conversions can also change recent performance.
Comparing a promotion with a baseline requires more than ROAS: review contribution, order count and average order value. A larger discount may raise attributed revenue while reducing what each sale contributes.
Common questions
What is the difference between ROAS and ROI?
ROAS compares attributed revenue with ad spend. ROI compares a profit or net-return measure with the relevant investment. A positive ROAS does not by itself establish a positive ROI.
What if I spent nothing on ads?
ROAS is undefined when ad spend is zero. Enter a positive spend to calculate it. Organic revenue is valuable, but dividing it by zero does not produce a meaningful campaign ROAS.
Should I include refunds?
For this calculator, use attributed revenue after discounts and refunds. If your ad platform uses another definition, reconcile it first or clearly label the difference when comparing results.
From numbers to an offer
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