Free ROAS calculator
Work out your return on ad spend, the break-even ROAS your margins allow, and the CPA and CPM behind it. Results update as you type.
How to calculate ROAS
ROAS (return on ad spend) is revenue from ads divided by what you spent on those ads. Spend $1,000 and attribute $4,000 in sales, and your ROAS is 4.0x, often written as 400%.
ROAS on its own says nothing about profit. A 3x ROAS is excellent for a product with an 80% margin and a loss for one with a 25% margin. That is why the calculator asks for gross margin: it turns ROAS into profit after ad spend, the number your bank account actually sees.
What is break-even ROAS?
Break-even ROAS is the ROAS at which ad spend eats exactly all of your profit on an order. The formula is 1 divided by your contribution margin, where contribution margin is price minus product cost, shipping, and fees, as a share of price.
Sell a $50 product that costs $15 to make and $5 to ship, with no fees, and you keep $30, a 60% margin. Your break-even ROAS is 1 / 0.6 = 1.67x, and your break-even CPA is $30. Anything above 1.67x is profit; anything below is buying revenue at a loss.
Target ROAS adds the profit you want to keep. If you want 20% of every sale left after ads, the margin left for advertising is 40%, so you need 1 / 0.4 = 2.5x.
CPA and CPM: the inputs behind ROAS
CPA (cost per acquisition) is spend divided by conversions. Compare it against your break-even CPA: if you pay $35 to acquire a customer who leaves you $30 of contribution, every sale loses $5 before repeat purchases.
CPM (cost per thousand impressions) is the price of attention. When CPM rises but CTR and conversion rate hold, ROAS falls. The usual cause is creative fatigue: the same audience has seen the same ads too often, so the platform charges more to keep showing them.
How to improve a low ROAS
There are only three levers: pay less for attention (CPM), convert more of it (CTR and conversion rate), or earn more per order (average order value and margin). Creative moves the first two. Fresh, specific creative keeps frequency down and CTR up, which is why high-spend accounts test new ads every week instead of every quarter.
Frequently asked questions
What is a good ROAS?
A good ROAS is any ROAS above your break-even ROAS, so it depends on margin. Many ecommerce brands with 50 to 60% contribution margins need roughly 1.7x to 2x to break even and treat 3x or more as healthy. Use the break-even tab to find your own number.
What is the formula for break-even ROAS?
Break-even ROAS = 1 / contribution margin. Contribution margin is (price minus product cost, shipping, and fees) divided by price. A 40% contribution margin gives a break-even ROAS of 2.5x.
Is ROAS the same as ROI?
No. ROAS divides revenue by ad spend and ignores product costs. ROI divides profit by total investment. A campaign can show a 3x ROAS and still lose money if margins are thin, which is why this calculator also shows profit after ad spend.
How do I calculate ROAS as a percentage?
Multiply the ROAS ratio by 100. A 4x ROAS is 400%, meaning every $1 of ad spend returned $4 in revenue.
What is the difference between CPA and CPM?
CPM is what you pay for 1,000 impressions, so it measures the cost of reach. CPA is what you pay for one conversion, so it measures the cost of results. CPA = CPM / 1,000 / (CTR x conversion rate).
Does this ROAS calculator work for Meta, Google, and TikTok ads?
Yes. The formulas are platform independent. Use the spend, revenue, conversions, and impressions your ads manager reports, and keep the attribution window consistent when you compare campaigns.
ROAS problem, or creative problem?
When CPM climbs and CTR slides, the fix is new creative. LocalAds turns one product URL into a full set of on-brand, ready-to-test ads.