How do you calculate ROAS?

Divide the revenue your ads generated by the amount you spent on them. £4,500 of revenue from £1,500 of spend is a ROAS of 3.0x.

What is the difference between ROAS and ROI?

ROAS compares revenue with ad spend only. ROI compares profit with all costs, including the product, shipping and fees. A campaign can have a healthy ROAS and a negative ROI if margins are thin.

What is break-even ROAS?

The ROAS at which your ad spend uses up all of your gross margin, so you neither make nor lose money. It equals 1 divided by your gross margin as a decimal.

It depends on your margin. At a 60% margin a 2x ROAS makes a profit, because break-even is about 1.67x. At a 40% margin it loses money, because break-even is 2.5x.

ROAS calculator for Meta ads

ROAS (return on ad spend) is the revenue your ads brought in divided by what you spent on them. If you spent £1,500 and the ads drove £4,500 of sales, your ROAS is 3.0x: every £1 of ad spend came back as £3 of revenue.

A ROAS number on its own does not tell you whether you made money. That depends on your margin, which is why this calculator also shows your break-even ROAS and your profit after ad spend.

Your numbers

Revenue from ads£Ad spend£Gross margin%After product, shipping and fees.

ROAS

3.00x

Every £1 of ad spend brought back £3.00 in revenue.

Break-even ROAS

1.82x

The ROAS where ad spend eats all the margin. Above it you make money.

Profit after ad spend

£975.00

Revenue times margin, minus ad spend.

Verdict

Profitable

You are 1.18x above break-even.

ROAS = revenue from ads / ad spend. Break-even ROAS = 1 / gross margin. Everything is worked out in your browser.

The ROAS formula

ROAS = revenue from ads / ad spend. Meta shows it in Ads Manager as purchase ROAS, using the purchase value your pixel or Conversions API reports.

Break-even ROAS = 1 / gross margin. With a 50% margin you need a ROAS of 2.0x just to cover the ad spend. With a 25% margin you need 4.0x.

What is a good ROAS?

A good ROAS is any ROAS comfortably above your break-even ROAS. A brand with 70% margins can make money at 2x, while a brand with 25% margins loses money at 3x. Work out your break-even first with the break-even ROAS calculator at /tools/break-even-roas-calculator, then judge every campaign against it.

If customers buy again, a first-order ROAS below break-even can still be profitable over the customer's lifetime. Decide how long you are willing to wait for that payback before you scale.

How to raise ROAS

Most ROAS problems are creative problems. Before you touch targeting or bids, test new ads:

Remake ad formats that have already been proven on Meta, rather than designing from a blank page. The guide at /guides/winning-meta-ads shows how to find them.
Test several angles at once, then move spend to the winner. See /guides/ad-creative-testing.
Raise order value with bundles, which lowers the ROAS you need to break even.

Frequently asked questions

How do you calculate ROAS?: Divide the revenue your ads generated by the amount you spent on them. £4,500 of revenue from £1,500 of spend is a ROAS of 3.0x.
What is the difference between ROAS and ROI?: ROAS compares revenue with ad spend only. ROI compares profit with all costs, including the product, shipping and fees. A campaign can have a healthy ROAS and a negative ROI if margins are thin.
What is break-even ROAS?: The ROAS at which your ad spend uses up all of your gross margin, so you neither make nor lose money. It equals 1 divided by your gross margin as a decimal.
Is a 2x ROAS good?: It depends on your margin. At a 60% margin a 2x ROAS makes a profit, because break-even is about 1.67x. At a 40% margin it loses money, because break-even is 2.5x.