ROAS Calculator: Return on Ad Spend
Enter ad revenue and ad spend to see your ROAS and the gap between revenue and spend.
ROAS Formula
ROAS = Ad Revenue ÷ Ad Spend
Break-even ROAS = 1 ÷ Gross profit margin. At a 25% margin, break-even ROAS is 4x, so you need more than 4x to make a profit.
How Do You Evaluate ROAS?
ROAS alone isn't enough; always read it together with your gross profit margin. The same 3x ROAS can be profitable for a product with a 60% margin and lose money on one with a 20% margin. That's why target ROAS should be calculated separately for each campaign.
| Industry | Avg ROAS | Target ROAS |
|---|---|---|
| E-commerce (Fashion) | 3–5x | 4–6x |
| E-commerce (Electronics) | 6–10x | 8–12x |
| B2B SaaS | 3–8x | 5–10x |
| Beauty & Cosmetics | 4–7x | 5–8x |
| Food & Grocery | 5–9x | 6–10x |
Google Ads' tROAS (Target ROAS) bidding strategy needs at least 30 days of conversion data. tROAS campaigns started without enough data can waste budget. Collect data with the Maximize Conversions strategy first, then switch to tROAS.
The Difference Between ROAS and ROI
ROAS and ROI (return on investment) are two different metrics. ROAS counts only ad spend, while ROI also includes product costs, operating expenses and every other cost. When product margins are thin, ROAS can be high while ROI is low or even negative. That's why it's worth tracking both.
How to Set a Target ROAS?
Target ROAS depends on your product margin and business model. At a 50% product margin, ROAS has to be at least 2 (200%) to break even; anything lower doesn't cover the ad spend. The usual advice is to set target ROAS at least 30 to 50 percent above break-even.
ROAS Benchmarks in E-Commerce and Digital Advertising
Acceptable ROAS varies a lot by industry. In e-commerce, average Google Ads ROAS usually falls between 4 and 8, meaning 4 to 8 units of revenue for each unit of ad spend. For high-ticket products (luxury goods, B2B software), a ROAS of 2-3 can still be profitable. Use your gross profit margin as the main reference when setting your own benchmark.
Most Common Mistakes in ROAS Optimisation
ROAS calculated without correct conversion tracking is misleading. The last-click attribution model ignores what other channels in the conversion path contributed. Reading ROAS in the moment, without allowing for seasonality and campaign warm-up, can lead to wrong optimisation decisions. Comparisons are more reliable with at least four weeks of data.
ROAS in Brand Awareness Campaigns
ROAS alone isn't the right measure for brand awareness campaigns, which aim at long-term brand equity more than immediate sales. Keep awareness campaigns in a separate budget and judge them with other KPIs such as impressions, reach and growth in branded search.