Free tool
ROAS calculator.
Punch in ad spend, revenue from ads, and your gross margin. The calculator returns ROAS, gross profit after ad cost, and the break-even ROAS you need to clear at your current margin.
Calculator
Ad ROI & break-even
Results
- ROAS
- 3.00x
- Gross profit
- $350
- Break-even ROAS
- 2.22x
How we calculate
- ROAS = Revenue / Ad spend.
- Gross profit = Revenue x margin minus ad spend.
- Break-even ROAS = 1 / margin. Any ROAS above this is profitable at the stated margin.
How to use this
Pull a 30 or 60 day window from your ad platform of choice. Use net revenue (after discounts and refunds) and the ad spend reported by the platform. For gross margin, use product cost plus any per-unit fulfillment cost, divided by revenue, then subtracted from 100.
If you run both prospecting and retargeting, calculate each separately. Retargeting ROAS will almost always look stronger on its own, and blending the two hides how prospecting actually performs.
How we calculate
ROAS is revenue divided by ad spend. Gross profit is revenue multiplied by gross margin, minus ad spend. Break-even ROAS is one divided by gross margin, so any ROAS above that multiple covers product cost and ad cost.
These formulas assume the ad-attributed revenue is real incremental revenue. Platform reporting tends to overstate this. Treat break-even ROAS as a floor, not a target.
Limitations
Channel-level ROAS ignores overhead, fixed costs, returns, and customer service. It is a channel efficiency metric, not a profitability metric. For a blended view across all marketing, use the MER calculator instead.
Margin varies by SKU mix. If your bestsellers skew toward low-margin hero products, your true break-even ROAS is higher than the single-number version implies.
Keep going
- MER calculator for blended marketing efficiency.
- Paid ads service for managed Meta and Google campaigns.
- CRO service to lift the revenue side of the ratio.