ROAS calculator that knows your margin.
Return on ad spend, break-even ROAS and the target ROAS your contribution margin actually needs. Built by the team that runs paid social and conversion as one program.
ROAS is revenue from ads divided by ad spend; $15,000 of attributed revenue on $5,000 of spend is 3.0x. Break-even ROAS is 1 divided by your contribution margin, so a 45 percent margin brand breaks even at 2.22x. The calculator below gives you both, plus the target ROAS and cost per order you need to keep the profit you want.
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How to calculate ROAS
ROAS is revenue divided by ad spend. If Meta attributes $15,000 in purchases to $5,000 of spend, ROAS is 3.0x, written as 300 percent in some dashboards. That is the whole formula, and it is also where most reporting goes wrong. ROAS does not know what the product cost to make, ship or process. A 3.0x ROAS on a 25 percent contribution margin loses money; the same 3.0x on a 55 percent margin is healthy. The calculator above puts margin next to ROAS so the number means something.
Two definitions to fix before you compare months. First, which revenue: gross, or net of discounts and refunds? Use net; refunds on paid orders are real. Second, which attribution window: Meta defaults to 7-day click and 1-day view, TikTok and Pinterest differ, and Shopify counts orders with no window at all. Pick one and keep it. Our step-by-step ROAS guide walks through the attribution choices in more detail.
What is break-even ROAS and why it matters more
Break-even ROAS is the return at which ad revenue covers the cost of goods, shipping, fees and the ad spend itself, with nothing left. The formula is 1 divided by contribution margin. A $80 order that costs $28 in product, $9 to ship and about $4 in fees and variable costs leaves $39, a 48.8 percent margin, so break-even ROAS is 2.05x. Anything below that number is a paid loss, however good the dashboard looks.
Break-even ROAS also gives you the maximum cost per purchase you can bid to. On an $80 order with $39 of contribution, a CPA above $39 loses money. That is the number to put into cost-cap bidding on Meta or TikTok, with room under it for profit. Second tab above.
What ROAS do you actually need?
- Single-purchase brands need the first order to carry the whole cost: target ROAS = 1 / (margin minus the profit you want to keep).
- Subscription and consumable brands can run a lower first-order ROAS because repeat orders arrive without new ad spend. The third tab discounts break-even by expected 90-day repeats.
- Launches and new platforms run below target for the learning period; set a date to be at target, not a hope.
- High-margin, low-AOV products (supplements, skincare) often look great on ROAS and poor on absolute profit per order. Watch CPA in dollars too.
- Blended vs platform ROAS: judge budget on total revenue divided by total spend across every platform; use platform ROAS only to compare campaigns against each other.
Three ways to raise ROAS without cutting spend
1. Landing page conversion rate. ROAS scales linearly with the share of clicks that buy. Moving a page from 2 percent to 3 percent is a 50 percent ROAS gain at identical CPM and click-through rate. Unbounce’s analysis of about 41,000 landing pages puts the ecommerce median at 4.2 percent (source); most paid traffic lands on pages well under that. This is what our landing pages for paid traffic program does.
2. Average order value. Bundles, free-shipping thresholds and post-purchase upsells raise revenue per order with no extra clicks. Grab Green lifted AOV 80 percent through bundling; Momentous added $2M in profit from a single shipping-threshold test.
3. Creative and audience, last. Fresh creative lowers CPM and raises click-through, but the auction fights you every week. Page and offer gains compound across every campaign you ever run, which is why we run media buying and conversion work as one paid social + CRO program, with the Meta ads and TikTok ads teams reporting the same blended number.
For the cost side of the equation, see what TikTok ads cost and what a Facebook ads agency charges.
Questions people ask
01What is a good ROAS? +
There is no universal number. A good ROAS is one above your break-even ROAS, which is 1 divided by your contribution margin. A brand with a 50 percent margin breaks even at 2.0x and needs roughly 2.5x to 3x to make money after overheads; a 25 percent margin brand breaks even at 4.0x. Compare ROAS to your own margin, not to someone else’s benchmark.
02How do you calculate ROAS? +
Divide revenue attributed to ads by the ad spend that produced it. $25,000 in attributed revenue on $5,000 of spend is a ROAS of 5.0x, or 500 percent. Use the same attribution window and the same revenue definition (gross or net of discounts and refunds) every time, or the number is not comparable month to month.
03What is break-even ROAS? +
The ROAS at which ad revenue exactly covers cost of goods, shipping, payment fees and the ad spend itself, leaving zero profit. The formula is 1 divided by contribution margin. If each $100 order leaves $40 after product, shipping and fees, the margin is 40 percent and break-even ROAS is 2.5x.
04Is ROAS the same as ROI? +
No. ROAS compares revenue to ad spend and ignores every other cost. ROI compares profit to total investment. A campaign can show a 3x ROAS and still lose money if the contribution margin is under 33 percent. Use ROAS to run campaigns day to day and ROI, or profit after ad spend, to decide whether the channel is worth keeping.
05Why is my ROAS different in Meta and in Shopify? +
Platforms count conversions within their own attribution windows, and two platforms can claim the same order. Shopify counts actual orders. A platform ROAS above a blended ROAS calculated from total ad spend and total revenue is normal. Judge spend decisions on the blended figure and use platform ROAS for relative comparisons between campaigns.
06How can I improve ROAS without cutting spend? +
The fastest lever is usually on the site, not in the ad account. Raising landing page conversion rate from 2 percent to 3 percent lifts ROAS by 50 percent at the same CPM and click-through rate. Average order value lifts through bundles, thresholds and post-purchase upsells move it the same way. Creative refresh and bid changes come after that.
Your ROAS is a page problem before it is a bid problem.
Get a free, no-obligation audit of your ad accounts and the pages they land on. We show you where the margin is leaking.