ROAS in one line
ROAS = revenue ÷ ad spend. Spend 5,000 to generate 25,000 and ROAS is 5× — every dollar returned five. It is a revenue ratio, not a profit measure, which is exactly where sellers get into trouble.
Break-even ROAS is the number that matters
At a 40% gross margin you need 2.5× just to cover product cost and ads. Below that, growth destroys cash. The calculator derives it automatically: 1 ÷ margin. Raise margin and the break-even ROAS falls; that is why pricing work beats bidding work.
Reading ROAS by channel
- Brand search can run 8–15× because intent is already there
- Prospecting on social often sits at 1.5–3× — acceptable if it feeds retargeting
- Email and SMS frequently exceed 20×; they are not comparable to paid social
- Blended ROAS (all revenue ÷ all spend) is the honest business number
What ROAS cannot see
Repeat purchases, lifetime value and organic halo. A campaign at 2× with strong retention can beat one at 6× with none — which is why ROAS pairs with LTV and CAC in this toolkit.
Frequently Asked Questions
What is a good ROAS?
It depends on margin: 4× is strong at 40% margin, but inadequate at 15% margin.
Is ROAS the same as ROI?
No — ROAS ignores costs other than ad spend; ROI nets everything out.
Should I use platform-reported ROAS?
Treat it as directional; attribution windows over-count. Reconcile with blended revenue.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
BizCalcTool runs entirely in your browser. The figures you enter are never uploaded, stored or shared — there is no backend to send them to.