ROAS calculator
Enter your ad spend and the revenue it generated to see ROAS and ACOS, and add the number of conversions for your CPA. With your margin you also see the ROAS at which your ads pay for themselves and what is left after ad spend.
How it is calculated
ROAS formula
ROAS = revenue from ads ÷ ad spend. Return on ad spend tells you how much revenue each dollar of advertising brought in. Google Ads expresses target ROAS as a percentage and multiplies by 100: $5 in revenue for every $1 in ad spend is a ROAS of 500%.
Example: $500 in ad spend brings in $2,000 in revenue. ROAS = 2,000 ÷ 500 = 4, or 400%. Every advertising dollar generated $4 in revenue.
ACOS: the inverse of ROAS
Amazon Ads usually works with ACOS (advertising cost of sales): ACOS = ad spend ÷ ad revenue × 100. In the example 500 ÷ 2,000 = 25% – a quarter of the revenue went to advertising. ACOS and ROAS convert directly into each other: ACOS = 1 ÷ ROAS, ROAS = 1 ÷ ACOS. A ROAS of 4 is an ACOS of 25%, an ACOS of 50% is a ROAS of 2.
CPA: cost per conversion
CPA = ad spend ÷ number of conversions. With 40 orders, each one cost 500 ÷ 40 = $12.50 in advertising. Revenue per conversion (here 2,000 ÷ 40 = $50) is the average order value of the purchases driven by the ads.
Break-even ROAS: when do your ads pay off?
A ROAS of 4 sounds good, but on its own it says nothing about profit. What matters is how much of the revenue is left after cost of goods and variable costs – the margin before ad spend. Your ads break even exactly when that margin covers the ad spend. The break-even ROAS formula:
Break-even ROAS = 1 ÷ margin and break-even ACOS = margin.
| Margin | Break-even ROAS | Break-even ACOS |
|---|---|---|
| 20% | 5 | 20% |
| 30% | 3.33 | 30% |
| 40% | 2.5 | 40% |
| 50% | 2 | 50% |
With a 40% margin, $2,000 in revenue brings $800 in gross profit; after $500 in ad spend, $300 is left. With only a 30% margin and a ROAS of 2 ($1,000 spend, $2,000 revenue), however, $600 in gross profit faces $1,000 in ad spend: −$400, even though revenue is twice the ad spend. Fixed costs such as rent or salaries are not included in the break-even ROAS.
Getting the inputs right
Spend, revenue and conversions must come from the same period and the same campaign. The ad platform attributes revenue according to its own attribution model – purchases that would have happened anyway can be included. Keep revenue and margin consistent (both with or both without sales tax), otherwise the break-even point shifts.
Frequently asked questions
How do you calculate ROAS?
Divide the revenue from ads by the ad spend. $2,000 in revenue on $500 in spend is a ROAS of 4, or 400%.
How do I convert ROAS to a percentage?
Multiply the ROAS ratio by 100: a ROAS of 4 equals 400%, a ROAS of 2.5 equals 250%. Google Ads uses the percentage for target ROAS.
What is the difference between ROAS and ACOS?
Both compare the same two numbers, just the other way round: ROAS = revenue ÷ spend, ACOS = spend ÷ revenue × 100. An ACOS of 25% equals a ROAS of 4.
What is the break-even ROAS formula?
Divide 1 by your margin before ad spend as a decimal. With a 40% margin: 1 ÷ 0.4 = 2.5. If your actual ROAS is higher, something is left after ad spend.
What is a good ROAS?
That depends entirely on your margin. The lower limit is your break-even ROAS: below it, the ads cost more than they bring in as gross profit. There is no universal target number.
What is the CPA calculation formula, and how do I set a target CPA?
CPA = ad spend ÷ conversions, e.g. $500 ÷ 40 = $12.50. A sensible ceiling for a target CPA is the gross profit per conversion: revenue per conversion × margin, in the example $50 × 40% = $20.
Sources and legal basis
- Google Ads Help: Target ROAS bidding (ROAS = revenue ÷ ad spend × 100%)
- Google Ads Help: Average cost per action (CPA) – definition (cost ÷ conversions)
- Amazon Ads: What is ACOS (advertising cost of sales)? – ACOS = ad spend ÷ ad revenue × 100, ROAS = inverse
As of:
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