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Revenue generated per dollar of ad spend (ROAS).
Ad spend ROI (Return on Investment) measures the actual profit generated by your advertising after accounting for both the ad cost and the product costs. While ROAS (Return on Ad Spend) measures revenue per ad dollar, ROI measures profit per ad dollar. A 4:1 ROAS sounds healthy, but if your product costs consume 60% of that revenue, the true ROI is negative. This calculator shows both metrics so you can see the full picture.
ROAS answers “how much revenue did my ads generate?” ROI answers “did my ads actually make money?” The distinction matters because scaling a high-ROAS campaign with low margins amplifies losses, not profits. The ROAS benchmark ranges by channel provide context for whether your ROAS number is competitive, but this calculator reveals whether competitive ROAS translates into actual profit for your specific margin structure.
The calculator uses these formulas:
ROAS = Ad Revenue / Ad Spend
Gross Profit = Ad Revenue x (1 – COGS %)
Net Profit = Gross Profit – Ad Spend
ROI = (Net Profit / Ad Spend) x 100
CPA = Ad Spend / Orders
Break-Even ROAS = 1 / (1 – COGS %)
$3,000 ad spend generates $12,000 revenue (200 orders) at 35% COGS. ROAS = 4:1. Gross profit = $12,000 x 0.65 = $7,800. Net profit = $7,800 – $3,000 = $4,800. ROI = 160%. CPA = $15. Profit per customer = $24. Break-even ROAS = 1.54:1. Every dollar above the 1.54:1 break-even threshold generates profit. At 4:1, the campaign is strongly profitable.
Use it monthly to evaluate overall ad program profitability. Use it per-channel (run separately for Meta, Google, TikTok) to identify which channels produce profitable customers versus expensive ones. Use it before scaling: if current ROI is 50% at $3,000/month spend, check whether the ROAS decay at higher spend levels would push ROI below your threshold.
This calculator measures campaign-level economics. For customer-level economics over their full lifetime, use the lifetime value approach alongside this tool. A campaign with negative 30-day ROI can still be profitable if customers’ lifetime purchases exceed the acquisition cost.
Using revenue instead of profit. A 4:1 ROAS at 60% COGS means you spent $1 to generate $4 revenue but only $1.60 gross profit. After the $1 ad cost, net profit is $0.60. The “4:1 ROAS” sounds great; the 60% ROI is decent but far less impressive. Always calculate ROI on gross profit, not revenue.
Mixing organic and paid attribution. Including revenue from organic traffic, direct visits, or email campaigns in “ad revenue” inflates ROAS and ROI. Use platform-reported conversions or GA4 channel-filtered revenue to isolate ad-driven purchases. The attribution methodology determines how accurately you separate paid from non-paid revenue.
Ignoring the break-even ROAS threshold. If your COGS is 40%, your break-even ROAS is 1.67:1. Any campaign below 1.67:1 loses money on every sale regardless of volume. Scaling a below-break-even campaign means scaling losses. This calculator shows your specific break-even so you know the floor.
Not accounting for marketplace fees in COGS. Amazon sellers often calculate COGS as product cost only, ignoring the 15% referral fee + FBA fees that consume another 20 to 30% of revenue. True COGS for Amazon FBA typically runs 50 to 65%, dramatically raising the break-even ROAS. The FBA fee calculator computes the true all-in cost per Amazon unit.
Our ROAS benchmarks break down target returns by ad platform, product category, and spend level so you know whether your numbers are competitive or leaving money on the table.
ROAS measures revenue per ad dollar (Revenue / Ad Spend). ROI measures profit per ad dollar ((Profit – Ad Spend) / Ad Spend x 100). A 4:1 ROAS at 50% margins produces 100% ROI. The same 4:1 ROAS at 70% margins produces only 20% ROI. ROAS is easier to calculate in real-time; ROI is more accurate for profitability decisions.
Average ecommerce ROAS is 3:1 to 5:1 blended across channels. Meta Ads typically deliver 3:1 to 6:1, Google Shopping 4:1 to 8:1, TikTok 2:1 to 4:1. “Good” depends on your margins: at 60% gross margin, 2:1 ROAS is profitable. At 30% margin, you need 4:1+ to break even. Use this calculator’s break-even ROAS output to find your specific floor.
Break-even ROAS is the minimum return on ad spend where gross profit from ad-driven sales exactly covers the ad cost, leaving zero net profit. Formula: 1 / (1 – COGS %). At 40% COGS: 1.67:1. At 50% COGS: 2:1. At 60% COGS: 2.5:1. Any ROAS below your break-even means every ad dollar loses money.
CPA = Total Ad Spend / Total Orders from Ads. If you spent $3,000 and generated 200 orders, CPA is $15. Compare CPA against your gross profit per order to determine profitability: if gross profit per order is $25 and CPA is $15, you profit $10 per ad-acquired customer before operating costs.
Both. Blended ROI shows overall ad program health. Per-channel ROI reveals which platforms generate profitable customers and which don’t. Run this calculator separately for Meta, Google, and TikTok to compare. A blended 3:1 ROAS might hide a 5:1 Google campaign subsidizing a 1.5:1 TikTok campaign that’s actually losing money.
No. This calculator measures single-period (typically monthly) ad economics. A campaign with negative 30-day ROI can still be profitable if acquired customers make repeat purchases over their lifetime. For lifetime-adjusted acquisition economics, calculate your customer LTV separately and compare it against the CPA this tool produces. If LTV is 3x+ CPA, the acquisition is sustainable even with negative first-purchase ROI.
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