Free tool
ROAS calculator.
Work out your return on ad spend, the break-even ROAS your margin actually demands, and what is left over once the ads are paid for.
Return on ad spend.
Put in revenue, spend and gross margin. Every figure updates as you type.
What those campaigns brought in over the period.
What you paid Google over the same period.
Of every dollar of that revenue, the share left after the cost of the goods or of delivering the service. This is what turns ROAS into profit.
5.00x
Return on ad spend
The numbers only hold if the campaign underneath them is built properly. A good ROAS on a narrow slice of brand traffic is not the same as a good account. If you want the structure, keywords, negatives and ad copy done once and done right, that is what a build is.
Break-even ROAS is the number that matters.
ROAS on its own tells you nothing about whether you made money. It is revenue over spend, and revenue is not profit. The figure that decides it is break-even ROAS, and it comes straight from your gross margin:
break-even ROAS = 1 ÷ gross margin
At a 50% margin you break even at 2x. At a 20% margin you break even at 5x. Two businesses can report the same 4x ROAS and one is printing money while the other is quietly going backwards. Until you know your margin, a ROAS figure is just a number.
What you need to break even, by margin.
Find your gross margin on the left. Anything below the break-even figure beside it is losing money on every sale.
| Gross margin | Break-even ROAS | Break-even ACOS | Typical of |
|---|---|---|---|
| 20% | 5.00x | 20% | retail, distribution |
| 30% | 3.33x | 30% | ecommerce with stock |
| 40% | 2.50x | 40% | ecommerce, light manufacture |
| 50% | 2.00x | 50% | mixed product and service |
| 60% | 1.67x | 60% | service with materials |
| 70% | 1.43x | 70% | professional services |
| 80% | 1.25x | 80% | software, digital products |
The "typical of" column is a rough orientation, not a benchmark. Use your own margin; it is the only one that applies to your account.
What is a good ROAS?
The honest answer is that nobody can tell you without knowing your margin, and any article quoting an industry average is describing businesses that are not yours. Three things decide it:
01
Your margin sets the floor
Break-even ROAS is 1 ÷ margin. That floor is not negotiable and it is different for every business. Work it out before you judge any campaign.
02
Volume decides whether it matters
A 12x ROAS on $2,000 of spend makes less money than a 4x on $20,000. Pushing ROAS up by cutting spend back to brand terms looks like an improvement and usually is not.
03
What a customer is worth over time
If customers buy again, the first sale can run at or below break-even and still be a good trade. If they never return, the first sale has to pay for everything.
Four ways ROAS misleads you.
01
Blended against campaign
Account-level ROAS is an average with brand searches in it. People who were going to buy anyway inflate it. Split brand from non-brand before you judge anything.
02
The attribution window
A sale is credited back to the click, which may be weeks earlier. Short periods read badly at the start and too well at the end. Look at a window long enough for that to settle.
03
Revenue that is not revenue
If the conversion value includes GST, shipping, or orders that were later refunded, the ROAS is overstated. Check what value the tag is actually sending.
04
New against returning
A high ROAS carried by existing customers tells you little about whether the ads can find new ones, which is usually the job you are paying them to do.
ROAS: the questions.
How do you calculate ROAS?
Revenue attributed to the ads divided by what you spent on them. $40,000 of revenue on $8,000 of spend is a ROAS of 5, usually written 5x or 500%. It is a ratio, so the currency does not matter as long as both figures are in the same one.
What is break-even ROAS?
The ROAS at which the gross profit from your ads exactly covers the ad spend. It is 1 divided by your gross margin. At a 40% margin you need 2.5x just to stand still; at a 25% margin you need 4x. Any ROAS below that number is losing money however healthy it looks.
What is a good ROAS?
There is no universal figure, and anyone quoting one is guessing about your business. A 3x ROAS is comfortably profitable at a 60% margin and loss-making at 25%. Work out your break-even first; good is meaningfully above it, with enough volume to matter.
Is ROAS the same as ACOS?
They are the same information inverted. ACOS is ad spend divided by revenue, so a 5x ROAS is a 20% ACOS. Ecommerce and marketplace teams tend to use ACOS; Google Ads reports ROAS.
Should I use revenue or profit in the calculation?
ROAS is defined on revenue, which is exactly why it flatters low-margin businesses. This calculator takes your gross margin as well so it can show the profit after ad spend, which is the number that actually decides whether to keep spending.
Does a higher ROAS always mean a better account?
No. ROAS rises when you cut spend back to your safest keywords, usually brand terms, and total profit falls at the same time. A 12x ROAS on $2,000 of spend earns less than a 4x on $20,000. Judge ROAS and total profit together, never ROAS alone.
What ROAS should I set as a target in Smart Bidding?
Start from break-even, add the margin you want, and check the account has enough conversion history to bid on. A target ROAS set well above what the account has ever achieved will simply throttle delivery until it stops serving.
Why is my Google Ads ROAS different from my actual revenue?
Attribution window and model. Google counts a conversion back to the click date within your chosen window, so a sale today can be credited to a click three weeks ago. Compare a long enough period that the timing differences wash out, and reconcile against your own sales data before acting on it.
This calculator does arithmetic on the figures you enter. It does not connect to your account and nothing is sent anywhere.
Know the number. Then build something worth measuring.
A calculator tells you where you stand. It does not fix a campaign that was put together badly in the first place. A build is the keywords, the ad groups, the negatives, the ad copy and a budget forecast, done once, for a one-off price.
Prices in US dollars. Also useful: the CPC calculator.