Paid media
Turn ad spend and revenue into ROAS, and the ROAS you actually need to break even.
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What is a good ROAS?
A good ROAS is any ROAS above your break-even ROAS, which is 1 ÷ gross margin. At 50% margin you need 2x just to cover ad spend; at 25% margin you need 4x. Platforms report revenue, not profit, so set targets from your own margin after returns, shipping and fees, not from an industry average.
Profitable, your 5.00× ROAS clears the 1.67× you need to break even at 60% margin.
Ook bekend als “ROAS berekenen” of “ROAS berekening”, vul hierboven uw omzet, advertentiekosten en marge in.
About this calculator
ROAS on its own is a vanity number, a 4x ROAS can be a great campaign or a losing one depending entirely on your margin. This calculator pairs the ROAS you're actually getting with the break-even ROAS your gross margin requires, so "is this campaign profitable" has a real answer instead of a gut-feel one.
How to use it
- Enter the revenue a campaign or channel generated, and the ad spend that produced it.
- Enter your gross margin, the percentage of revenue left after cost of goods sold, before ad spend.
- ROAS and ACOS come from revenue and spend directly. Break-even ROAS and estimated gross profit come from margin.
- Compare your ROAS to the break-even line: above it, the campaign is adding profit; below it, it's losing money even though revenue looks healthy.
Methodology
ROAS is revenue ÷ ad spend. ACOS (advertising cost of sale) is the inverse framing: spend ÷ revenue, expressed as a percentage, the metric Amazon sellers typically report.
Break-even ROAS is 1 ÷ gross margin (as a decimal). At 60% margin, break-even ROAS is 1.67x, below that, every dollar of ad-driven revenue costs more in ad spend than it returns in margin.
Estimated gross profit is revenue × margin, minus ad spend. This is the number that actually determines whether a campaign made money, ROAS alone can't tell you that without margin.
This is a single-period calculation. It doesn't account for LTV beyond the first purchase, so a campaign that looks unprofitable on ROAS alone can still be worth running if repeat purchase or subscription revenue closes the gap later.
ROAS, ACOS and break-even ROAS formulas
ROAS = Revenue from ads ÷ Ad spend ACOS = (Ad spend ÷ Revenue from ads) × 100 Break-even ROAS = 1 ÷ Gross margin Estimated gross profit = (Revenue from ads × Gross margin) − Ad spend
- Revenue from ads
- Revenue attributed to the campaign or channel for the period, in the same currency as spend.
- Ad spend
- Media cost charged by the platform for that same period. Keep agency fees out unless you want a fully loaded view.
- Gross margin
- Share of revenue left after cost of goods, entered as a percentage and used as a decimal (60% = 0.60).
- ACOS
- Advertising cost of sale, the inverse of ROAS shown as a percentage. Lower is better.
Google Ads expresses ROAS as a ratio in its API, where a target of 3.5 means a 350% return on ad spend (Google for Developers). The same campaign can therefore be described as 3.5x, 350% or an ACOS of 28.6%. All three are the same number. If gross margin is zero or blank, break-even ROAS cannot be calculated, which is why the tool shows a dash rather than infinity.
Worked example: a D2C skincare brand on Meta
A skincare brand spends ₹1.5 lakh on Meta in a month. Ads Manager attributes ₹6 lakh of revenue to the campaign. After product cost and packaging, gross margin is 45%.
- ROAS = ₹6,00,000 ÷ ₹1,50,000 = 4.0x
- ACOS = ₹1,50,000 ÷ ₹6,00,000 × 100 = 25%
- Break-even ROAS = 1 ÷ 0.45 = 2.22x
- Gross profit after ads = (₹6,00,000 × 0.45) − ₹1,50,000 = ₹2,70,000 − ₹1,50,000 = ₹1,20,000
- Now fold in returns, shipping and payment fees, which bring the true margin down to 35%: break-even ROAS = 1 ÷ 0.35 = 2.86x, and profit = (₹6,00,000 × 0.35) − ₹1,50,000 = ₹60,000
The campaign is profitable either way, but the cushion halves once real costs go into the margin. A 4.0x ROAS is 1.8 times break-even on product margin alone and only 1.4 times break-even on the fuller margin. That gap is how much room the brand has before rising CPMs or a weak creative push it underwater.
What is a good ROAS?
There is no single number. Shopify notes that a good ROAS depends on profit margins, operating costs and business goals, and Amazon Ads says the same about ACOS: there is no universal good figure, and the starting point is to keep ACOS below your profit margin.
A practical decision rule:
- Below break-even ROAS: the campaign loses money on the first order. Keep it running only if you have cohort data showing repeat purchases recover the gap.
- Between break-even and roughly 1.3x break-even: profitable on paper but fragile. Attribution error, returns or a CPM spike can wipe it out.
- Well above break-even: you probably have room to raise budget, accepting some ROAS decline as you reach colder audiences.
Because platform ROAS is attributed, not incremental, check it against blended numbers before scaling. The ROAS to MER converter shows how platform ROAS compares with total revenue ÷ total spend, and why ROAS can mislead covers the difference between blended and incremental return.
ROAS in India vs the US
Two things distort ROAS for Indian D2C brands. First, cash on delivery: platforms count a COD order as revenue when it is placed, but some of those parcels come back as return to origin (RTO) and never get paid for. Run the numbers through the RTO-adjusted ROAS calculator before you trust a platform figure. Second, GST on ad invoices: whether it appears on the invoice or is paid under reverse charge depends on which entity bills you, so agree with your accountant whether "ad spend" in your reports includes or excludes tax and keep it consistent. Signal loss from COD and browser restrictions also lowers attributed revenue, which server-side Meta CAPI for COD orders helps address.
US e-commerce is mostly prepaid by card, so the main ROAS distortions are returns, sales tax and attribution windows rather than unpaid orders. Revenue reported to ad platforms usually comes from the pixel or a store integration and may include or exclude tax and shipping depending on setup, so confirm which value your tracking sends. With higher average order values and card refunds rather than RTO, the gap between platform ROAS and cash ROAS is usually driven by returns and by multiple platforms claiming the same conversion.
Common ROAS mistakes
- Using product gross margin instead of contribution margin. Returns, shipping, payment gateway fees and marketplace commissions all reduce the margin that break-even ROAS should be built on.
- Adding up ROAS from Google, Meta and other platforms. Each platform takes credit for conversions it touched, so the sum overstates what ads delivered. Compare against total revenue ÷ total spend.
- Judging prospecting and retargeting campaigns on the same ROAS target. Retargeting looks efficient because many of those buyers would have purchased anyway.
- Mixing tax treatment: revenue reported with GST or sales tax included, spend reported without it, or the reverse. Pick one basis for both sides.
- Comparing ROAS across periods with different attribution windows or after a tracking change, then reading the difference as performance.
- Treating a below-break-even ROAS as a failure for a subscription or repeat-purchase product without checking customer lifetime value.
Sources
- Portfolio and standard bidding strategies, Google for Developers (Google Ads API). Accessed 2026-10-17.
- ACOS: Advertising cost of sales, Amazon Ads. Accessed 2026-10-17.
- Return on Ad Spend: How To Calculate Your ROAS (2026), Shopify. Accessed 2026-10-17.
FAQ
There's no universal good ROAS, it depends entirely on your gross margin. A 3x ROAS is excellent at 25% margin and barely break-even at 40% margin. Always compare your ROAS against your own break-even line, not an industry benchmark.
They're the same relationship inverted. ROAS = revenue ÷ spend (higher is better). ACOS = spend ÷ revenue, as a percentage (lower is better). Amazon sellers typically use ACOS, most other advertisers use ROAS.
ROAS measures revenue returned per ad dollar, not profit. If your margin is thin, most of that "returned" revenue is eaten by cost of goods before ad spend is even considered. Break-even ROAS translates margin into the ROAS threshold where ad spend stops being profitable.
Only if you fold them into the gross margin figure you enter. This calculator uses whatever margin percentage you provide, so build in returns, shipping cost, and marketplace fees before entering it for an accurate break-even line.
Multiply the ratio by 100. A ROAS of 3.5x is a 350% return on ad spend, which is how Google Ads expresses target ROAS in its interface. The percentage and the multiple carry identical information.
No. ROAS divides revenue by ad spend and ignores every other cost. ROI compares profit with total investment, so it accounts for cost of goods, fulfilment and overhead. A campaign can show a 3x ROAS and still have a negative ROI if margins are thin.
Break-even ACOS equals your margin as a percentage. At 30% margin, ACOS must stay below 30% for ads to pay for themselves, which is the same threshold as a break-even ROAS of 3.33x. Amazon sellers usually set targets in ACOS, everyone else in ROAS.
Usually because the margin behind the target is too generous, platforms are double counting conversions, or fixed costs such as salaries, tools and agency fees sit outside the calculation. Check break-even on contribution margin, then compare blended revenue with total marketing cost using the [CAC to LTV calculator](/calculators/cac-ltv).
Only if the goal is to acquire customers at zero first-order profit, for example when repeat purchase rates are proven. Most advertisers set a target ROAS above break-even to leave room for attribution error and overheads, then lower it deliberately when lifetime value justifies it.
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