How to Calculate ROAS

What Is the ROAS Formula?

ROAS = Attributed revenue ÷ Advertising cost

Example

If a campaign generates $12,500 in attributed revenue and costs $2,500 to run:

ROAS = $12,500 ÷ $2,500 = 5.0

The campaign has a 5x ROAS, also written as 5:1 or 500% ROAS. In practical terms, it generated $5 in attributed revenue for every $1 spent on advertising.

ROAS Calculation at a Glance

How Do You Calculate ROAS as a Percentage?

To convert ROAS into a percentage, multiply the result by 100:

ROAS percentage = Attributed revenue ÷ Advertising cost × 100

Using the example above:

$12,500 ÷ $2,500 × 100 = 500%

A 5x ROAS equals 500% ROAS.

How Do You Calculate ROAS From Ad Spend and Sales?

Use these four steps:

1. Select the revenue attributed to the campaign.
2. Confirm the campaign's total advertising cost.
3. Divide attributed revenue by ad spend.
4. Multiply by 100 if you need the result as a percentage.

Example: Google Ads Campaign

• Google Ads spend: $800
• Conversion value from Google Ads: $3,200

ROAS = $3,200 ÷ $800 = 4.0

The campaign produced a 4x ROAS, or 400%.

How Do You Calculate Maximum Ad Spend From a Target ROAS?

If you know the expected revenue and target ROAS, use this formula:

Maximum ad spend = Expected revenue ÷ Target ROAS

For example, if expected revenue is $20,000 and the target ROAS is 4x:

$20,000 ÷ 4 = $5,000

The campaign can spend up to $5,000 while meeting a 4x ROAS target, assuming it generates the expected revenue.

How Much Revenue Is Required for a Target ROAS?

Use:

Required revenue = Advertising cost × Target ROAS

If ad spend is $3,000 and the target ROAS is 3x:

$3,000 × 3 = $9,000

The campaign must generate $9,000 in attributed revenue to reach a 3x ROAS.

What Is a Good ROAS?

There is no single good ROAS for every business. A campaign is profitable when its ROAS exceeds the business's break-even ROAS.

A 2x ROAS may be profitable for a business with high contribution margins. A 5x ROAS may still lose money if product costs, fulfillment, discounts and other variable costs consume most of the revenue.

Break-Even ROAS Formula

Break-even ROAS = 1 ÷ Contribution margin

Use the contribution margin as a decimal.

If a business keeps 40% of revenue after product, fulfillment, payment and other variable costs:

1 ÷ 0.40 = 2.5

The break-even ROAS is 2.5x. The campaign generally needs to exceed 2.5x before it contributes profit, assuming all relevant variable costs are included.

ROAS vs. ROI

ROAS compares advertising-attributed revenue with advertising cost:

ROAS = Attributed revenue ÷ Ad spend

ROI compares profit with the total investment:

ROI = Profit ÷ Total investment × 100

ROAS does not automatically include:

• Product costs
• Shipping and fulfillment
• Payment processing fees
• Discounts and refunds
• Agency or platform fees
• Salaries and overhead
• Inventory costs

A high ROAS therefore does not always mean a campaign is profitable.

Which Revenue Should You Use in the Calculation?

Use revenue that is consistently attributed to the advertising campaign. Depending on the business, this could include:

• Purchase revenue from an ecommerce platform
• Conversion value recorded in Google Ads
• Revenue attributed by Meta Ads
• Customer revenue linked to a lead-generation campaign
• Subscription revenue attributed to the campaign

Keep the attribution model and reporting period consistent when comparing campaigns. Google Ads, Meta Ads and analytics platforms may assign credit differently, so combining their revenue figures can distort the result.

Common ROAS Calculation Mistakes

Including All Company Revenue

ROAS should use revenue attributed to the advertising activity. Using total company revenue measures blended ROAS instead.

Ignoring Refunds and Cancellations

Gross order value can overstate ROAS when a significant share of purchases is later refunded or canceled. Use net revenue when that better reflects the money the business keeps.

Comparing Different Attribution Windows

A 7-day click attribution window and a 30-day attribution window are not directly comparable. Keep attribution settings consistent when evaluating performance.

Treating ROAS as Profit

ROAS measures revenue efficiency. Profitability requires subtracting variable costs and other expenses.

Mixing New and Returning Customers

Returning customers may have lower acquisition costs but a different business value. Where the data allows, separate:

• New-customer ROAS
• Returning-customer ROAS
• Blended ROAS
• Customer lifetime value-based ROAS

The Simplest ROAS Calculator

Use this formula:

ROAS = Attributed revenue ÷ Ad spend

For example:

ROAS = $10,000 ÷ $2,000
ROAS = 5x

The campaign generated $5 in attributed revenue for every $1 spent. To judge whether that result is commercially successful, compare the 5x ROAS with the business's break-even ROAS and profit target.