ROAS Calculator: Find Your Return on Ad Spend and Break-Even Point

How to Use This ROAS Calculator

To use this ROAS calculator, enter your ad spend and the revenue those ads produced, then choose your currency. Four results come back:

1. ROAS as a ratio (5:1) and a percentage (500%).
2. Break-even ROAS, once you add your contribution margin.
3. Target ROAS, built from break-even plus the profit buffer you choose.
4. POAS (profit on ad spend), showing contribution profit per $1 of spend.

Got tax-inclusive revenue? Tick the VAT/GST box. The tool then strips out 20% UK VAT or 10% Australian GST before it divides anything. Planning a launch with no sales yet? Leave revenue empty, set a target, and this ROAS calculator works backwards to the revenue that campaign needs.

What Is ROAS (Return on Ad Spend)?

ROAS is the revenue earned for every unit of currency spent on advertising, written as a ratio such as 4:1 or a percentage such as 400%. Paid channels like Google Ads, Meta Ads, TikTok Ads and Amazon Ads all report it, which makes it the quickest way to compare them on one scale. That's its strength. The weakness is what it leaves out: product cost, shipping, returns and payment fees never enter the sum, so a 3:1 campaign can lose money when margins run thin.

How to Calculate ROAS

To calculate ROAS, divide the revenue your ads generated by the amount you spent on them.

ROAS = Ad revenue ÷ Ad spend

Multiply the result by 100 for a percentage. "Ad spend" deserves a wide definition here, covering media cost plus agency fees, creative production and tool subscriptions, since leaving any of those out makes a campaign look healthier than it is.

ROAS Example in USD, GBP and AUD

One Google Shopping campaign run in 3 markets produces the same ratio in every currency:

Currency never moves the ratio. Margin and sales tax do.

How to Calculate Break-Even ROAS

To calculate break-even ROAS, divide 1 by your contribution margin written as a decimal.

Break-even ROAS = 1 ÷ Contribution margin

Break-even ROAS is 4:1 if your contribution margin is 25%. Below that line, every ad-driven sale costs you money; above it, each order adds profit.

Gross Margin vs Contribution Margin

Contribution margin is the right input, not gross margin. Gross margin subtracts only the cost of goods sold (COGS). Contribution margin goes further and removes 4 variable costs per order: shipping, payment processing fees, packaging and the average cost of returns.

Take a $60 order carrying $24 of COGS. Its gross margin is 60%, yet once $6 shipping, $2 in fees, $1 of packaging and $3 of expected returns come off, contribution margin drops to 40% and break-even ROAS climbs from 1.67:1 to 2.5:1. Plug in the wrong margin and that store funds losing campaigns for months without noticing.

What Is a Good ROAS?

A good ROAS is any figure above your break-even ROAS, with 3:1 to 4:1 the target most ecommerce brands set. Real-world results land lower. Wicked Reports puts the 2026 ecommerce average near 2.87:1 and the median close to 2:1, which means about half of online stores run below 2:1. Startups usually need higher returns to cover fixed overheads, while established brands with strong repeat purchase rates scale profitably on less.

Customer lifetime value (LTV) moves the line again. A subscription coffee brand whose buyers place 3 more orders can accept a first-order ROAS below break-even, since those repeat orders arrive without fresh ad spend.

ROAS Benchmarks by Platform

Read these as platform-reported figures. Meta and Google can each claim credit for the same sale, so their totals regularly exceed what your store actually banked, and blended ROAS (total store revenue ÷ total ad spend) is the honest cross-check. Each platform runs its own attribution window, too, so confirm that setting before comparing two channels side by side.

How to Set a Target ROAS in Google Ads

To set a target ROAS in Google Ads, start from break-even and add a profit buffer, then enter that figure as a percentage under Bidding. Google defines target ROAS as conversion value divided by cost, so a 500% target asks for $5 back per $1 spent.

1. Calculate break-even ROAS from your contribution margin.
2. Add a profit buffer, for example 25% on top, turning 4:1 into 5:1 (entered as 500%).
3. Open the campaign's Bidding settings, choose "Maximize conversion value" and tick the target ROAS option.
4. Lower the target in small steps if conversion volume stalls.

Google Ads Help sets a floor of 15 conversions in the past 30 days for Search and Shopping campaigns before the strategy runs.

ROAS vs ROI vs POAS vs MER

ROAS tracks revenue per unit of ad spend, whereas POAS tracks profit per unit of ad spend. MER and ROI zoom out further, as the table shows.

Picture $10,000 of revenue at a 40% contribution margin on $2,500 of spend. ROAS reads 4:1. POAS reads 1.6, because $4,000 of contribution profit sits against that $2,500, and anything above 1.0 is profit. Amazon sellers meet a fifth metric, advertising cost of sales (ACoS), which simply flips ROAS: ACoS equals 1 ÷ ROAS, so 4:1 matches a 25% ACoS.

Why VAT and GST Change Your ROAS Calculator Results

Tax-inclusive revenue inflates ROAS by 20% in the UK and 10% in Australia, because the tax slice was never yours to keep. The UK standard VAT rate is 20% and Australian GST is 10%.

A London store showing £6,000 of revenue on £1,500 of spend reads 4:1, but its ex-VAT revenue is £5,000, so the true figure is 3.33:1. A Sydney shop with A$11,000 GST-inclusive revenue on A$2,500 of spend drops from 4.4:1 to 4:1 once the tax comes out. Feed this ROAS calculator net revenue, or tick the tax box, and the gap disappears. US sellers face a smaller risk, though some storefronts do fold sales tax into reported revenue, so check that column before trusting the ratio.

How to Increase ROAS

To increase ROAS, either raise revenue per order or cut ad spend that never converts. These 4 methods move one lever or the other:

1. Exclude existing customers and low-intent search terms, such as "free" and "jobs", from prospecting campaigns.
2. Raise average order value (AOV) with bundles and a free-shipping threshold set just above your current AOV.
3. Separate branded from non-branded search, since brand terms post inflated ROAS that hides weak prospecting.
4. Match each landing page to the exact offer and price shown in the ad.

Expect ROAS to dip as budgets grow. Every extra $1 reaches a colder, less qualified audience, so a falling ratio during scaling is normal while it stays above break-even.