What ROAS and break-even ROAS mean
ROAS (return on ad spend) is revenue divided by ad spend. A ROAS of 4 means every 1 spent on ads brought 4 in sales. It is the number most ad platforms optimise for, but on its own it does not tell you whether you made money.
Whether a campaign is profitable depends on your margin. The break-even ROAS is 100 divided by your gross margin percentage: with a 40% margin you need a ROAS of at least 2.5 just to cover the cost of the ads. Anything above that is profit, anything below is a loss even if the platform shows good results.
The calculator also gives cost per acquisition (CPA), cost per click (CPC), cost per thousand impressions (CPM), click-through rate (CTR), conversion rate and average order value, so you can see which part of the funnel to fix. All calculations run in your browser.
How to calculate ROAS and profit
- Enter the ad spend for the period you want to analyse.
- Enter the revenue the campaign generated, from your ads platform or analytics.
- Add conversions, clicks and impressions to get CPA, CPC, CTR, CPM and conversion rate.
- Enter your gross margin to see the break-even ROAS and the profit after ad costs.
- Compare your ROAS with the break-even ROAS: above it the campaign earns money, below it you are paying to sell.
Worked examples
Profitable online store campaign
Spend 1,000, revenue 4,000, 50 orders, 40% margin. ROAS is 4, CPA is 20 and break-even ROAS is 2.5, so the campaign leaves 600 profit after ads (4,000 × 40% − 1,000).
Good ROAS, still losing money
Spend 2,000, revenue 5,000, 20% margin. ROAS looks fine at 2.5, but break-even ROAS is 5, so the campaign loses 1,000. Lower the CPA, raise the order value or stop scaling it.
Finding the weak step
100,000 impressions, 800 clicks, 8 conversions, spend 400. CTR is 0.8% and conversion rate 1%, CPA is 50. If CTR is normal for your niche, the problem is the landing page, not the ad.
Frequently asked questions
What is a good ROAS?
There is no universal number. A good ROAS is one above your break-even ROAS, which depends on your margin. A store with a 60% margin breaks even at about 1.7, while a store with a 25% margin needs 4.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend only. ROI compares profit with total investment, including product costs, fees and staff. The profit after ads shown here is a step towards ROI, as it subtracts ad spend from gross profit.
How do I calculate CPA?
CPA is ad spend divided by the number of conversions. Spending 500 for 25 sales gives a CPA of 20. Compare it with your gross profit per order: if CPA is higher, every sale loses money.
How is break-even ROAS calculated?
Break-even ROAS = 100 / gross margin %. At a 50% margin it is 2, at 33% it is about 3. It is the point where the gross profit from ad-driven sales exactly pays for the ads.
Why does my ads platform show a different ROAS?
Platforms count conversions with their own attribution windows and models, and may include view-through conversions. Use the revenue from the source you trust most, ideally the same one every time, so results stay comparable.