ROAS Calculator
Use this calculator to determine your Return on Ad Spend (ROAS). ROAS is a key marketing metric that measures the revenue generated for every dollar spent on advertising.
Enter your Total Revenue Generated from Ads and your Total Cost of Ads to calculate your ROAS.
Calculate Your ROAS
Understanding ROAS & Formula
What is ROAS?
ROAS (Return on Ad Spend) is a simple metric used in digital marketing to evaluate the effectiveness of an advertising campaign. It helps you understand how much revenue you're getting back for every dollar (or unit of currency) you spend on advertising.
ROAS Formula
The formula for calculating ROAS is straightforward:
ROAS = (Total Revenue Generated from Ads / Total Cost of Ads) * 100%
Alternatively, it can be expressed as a ratio (Revenue per unit of Cost):
ROAS Ratio = Total Revenue Generated from Ads / Total Cost of Ads
For example, a ROAS of 500% or a ROAS Ratio of 5 means that for every $1 you spent on advertising, you generated $5 in revenue.
Why is ROAS Important?
ROAS helps marketers determine which strategies are working and which are not. It allows for comparison across different campaigns, ad groups, or even platforms. A high ROAS indicates efficient advertising that is driving significant revenue. However, a "good" ROAS varies greatly depending on profit margins, industry, and business goals.
ROAS Calculation Examples
Click on an example to see the calculation:
Example 1: High Revenue, Moderate Cost
Scenario: You ran a Google Ads campaign.
1. Known Values: Total Revenue from Ads = $10,000, Total Cost of Ads = $2,000.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($10,000 / $2,000) * 100% = 5 * 100% = 500%
4. ROAS Ratio: $10,000 / $2,000 = 5
Conclusion: Your ROAS is 500% (or a ratio of 5:1). For every $1 spent, you generated $5 in revenue.
Example 2: Lower Revenue, Lower Cost
Scenario: A small social media ad test.
1. Known Values: Total Revenue from Ads = $300, Total Cost of Ads = $150.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($300 / $150) * 100% = 2 * 100% = 200%
4. ROAS Ratio: $300 / $150 = 2
Conclusion: Your ROAS is 200% (or a ratio of 2:1). For every $1 spent, you generated $2 in revenue.
Example 3: Break-even ROAS (Revenue = Cost)
Scenario: An ad campaign where revenue equals cost (before considering profit margin).
1. Known Values: Total Revenue from Ads = $5,000, Total Cost of Ads = $5,000.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($5,000 / $5,000) * 100% = 1 * 100% = 100%
4. ROAS Ratio: $5,000 / $5,000 = 1
Conclusion: Your ROAS is 100% (or a ratio of 1:1). For every $1 spent, you generated $1 in revenue. This campaign is at the break-even point regarding revenue vs. ad cost.
Example 4: Negative ROAS (Losing Money)
Scenario: An underperforming ad campaign.
1. Known Values: Total Revenue from Ads = $800, Total Cost of Ads = $1,600.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($800 / $1,600) * 100% = 0.5 * 100% = 50%
4. ROAS Ratio: $800 / $1,600 = 0.5
Conclusion: Your ROAS is 50% (or a ratio of 0.5:1). For every $1 spent, you generated only $0.50 in revenue. This campaign is losing money based on ad cost.
Example 5: Very High Revenue, Low Cost
Scenario: A highly successful, low-budget campaign.
1. Known Values: Total Revenue from Ads = $25,000, Total Cost of Ads = $500.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($25,000 / $500) * 100% = 50 * 100% = 5000%
4. ROAS Ratio: $25,000 / $500 = 50
Conclusion: Your ROAS is 5000% (or a ratio of 50:1). For every $1 spent, you generated $50 in revenue. This is an exceptionally high-performing campaign.
Example 6: Moderate Revenue, High Cost
Scenario: A campaign with high competition or expensive keywords.
1. Known Values: Total Revenue from Ads = $3,000, Total Cost of Ads = $1,500.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($3,000 / $1,500) * 100% = 2 * 100% = 200%
4. ROAS Ratio: $3,000 / $1,500 = 2
Conclusion: Your ROAS is 200% (or a ratio of 2:1). For every $1 spent, you generated $2 in revenue. This might be acceptable depending on profit margins.
Example 7: Minimal Revenue, High Cost
Scenario: A failed ad campaign.
1. Known Values: Total Revenue from Ads = $50, Total Cost of Ads = $1,000.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($50 / $1,000) * 100% = 0.05 * 100% = 5%
4. ROAS Ratio: $50 / $1,000 = 0.05
Conclusion: Your ROAS is 5% (or a ratio of 0.05:1). For every $1 spent, you generated only $0.05 in revenue. This campaign is performing very poorly.
Example 8: Free Traffic (Cost = 0)
Scenario: You accidentally entered a cost of zero, or perhaps it was truly free traffic (e.g., influencer gifting resulting in sales but no direct ad spend).
1. Known Values: Total Revenue from Ads = $500, Total Cost of Ads = $0.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: Division by zero is mathematically undefined. In this context, with revenue > 0, it implies an infinitely good return.
4. ROAS Ratio: $500 / $0 is undefined.
Conclusion: The calculator would indicate an infinite or undefined ROAS, interpreting it as an extremely positive outcome where revenue was generated without cost.
Example 9: Zero Revenue, Some Cost
Scenario: An ad campaign that ran but generated no sales/revenue.
1. Known Values: Total Revenue from Ads = $0, Total Cost of Ads = $500.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($0 / $500) * 100% = 0 * 100% = 0%
4. ROAS Ratio: $0 / $500 = 0
Conclusion: Your ROAS is 0%. This means the campaign generated no revenue despite incurring costs.
Example 10: Large Scale Campaign
Scenario: A large-scale advertising effort across multiple platforms.
1. Known Values: Total Revenue from Ads = $500,000, Total Cost of Ads = $125,000.
2. Formula: ROAS = (Revenue / Cost) * 100%
3. Calculation: ROAS = ($500,000 / $125,000) * 100% = 4 * 100% = 400%
4. ROAS Ratio: $500,000 / $125,000 = 4
Conclusion: Your ROAS is 400% (or a ratio of 4:1). For every $1 spent, you generated $4 in revenue. This is a solid performance for a large campaign.
Frequently Asked Questions about ROAS
1. What does ROAS stand for?
ROAS stands for Return on Ad Spend.
2. What is the basic formula for ROAS?
The basic formula is (Total Revenue from Ads / Total Cost of Ads) * 100%. It can also be expressed as a ratio (Revenue / Cost).
3. What's the difference between ROAS and ROI?
ROAS specifically measures the revenue generated relative to the direct cost of advertising. ROI (Return on Investment) is broader, measuring profit (revenue minus *all* costs, including product costs, operational expenses, etc.) relative to the total investment. ROAS is campaign-specific, while ROI is often business-wide.
4. What is considered a "good" ROAS?
A "good" ROAS varies significantly by industry, business type, profit margins, and goals. A common benchmark might be 4:1 ($4 revenue for $1 cost), but for businesses with high operating costs, a 10:1 or more might be needed to be profitable. Conversely, businesses with high-margin products might be profitable with a 3:1 ROAS.
5. Why is my ROAS less than 100% (or less than 1 as a ratio)?
A ROAS below 100% (or below 1) means you are generating less revenue from your ads than you are spending on them. While you might still be profitable depending on margins and other costs (which ROAS doesn't include), from an ad spend perspective, you are losing money on the ad cost alone.
6. Does ROAS tell me if my ads are profitable?
Not directly. ROAS only considers ad revenue and ad cost. To determine profitability, you need to subtract the cost of goods sold (COGS) and other operating expenses from the ad revenue before comparing it to the ad cost. A high ROAS is necessary for profitability, but not sufficient on its own.
7. What inputs should I use for 'Total Revenue Generated from Ads'?
This should be the revenue that can be directly attributed to the specific advertising campaign you are measuring. This might come from conversion tracking set up in your ad platforms or analytics software.
8. What inputs should I use for 'Total Cost of Ads'?
This is the total amount spent on the advertising campaign you are measuring during a specific period. Get this figure directly from your ad platform (Google Ads, Facebook Ads, etc.).
9. Can I calculate ROAS for different campaigns or platforms?
Yes, absolutely. Calculating ROAS for individual campaigns, ad groups, keywords, or platforms is a standard practice to identify what's performing best and where to allocate budget. Just ensure you use the revenue and cost data specific to that segment.
10. What happens if my Total Cost of Ads is zero?
If your Total Cost of Ads is exactly zero but you generated revenue, the calculator cannot produce a standard ROAS number (division by zero). It implies an infinite return, as you got revenue without spending anything on ads. If both revenue and cost are zero, ROAS is undefined.
