ROAS calculator with break-even
Most ROAS calculators stop at the division. This one keeps going: from the revenue your ad account reports, through returns and variable costs, to the profit left after ads. The example values are preset. Replace them with your own.
US stores add sales tax at checkout, and most setups send the order value without it, so the tax box starts unchecked. Tick it if your conversion value includes tax, or if you sell in the UK or EU and your tracking reports prices with VAT.
Run your ROAS through to profit
- Revenue excluding tax$40,000
- after returns$30,000
- Contribution margin$9,000
- minus ad spend-$10,000
- Profit after ads-$1,000
A ROAS of 4.00 looks fine and still loses money. You need at least 4.44. POAS 0.90.
ROAS after tax and returns: 3.00 · Break-even on revenue after returns: 3.33
The ROAS formula with examples
ROAS compares the revenue a campaign brought in with what the campaign cost:
| Ad spend | Revenue from ads | ROAS | As a percentage |
|---|---|---|---|
| $1,000 | $4,000 | 4.0 | 400% |
| $2,500 | $5,000 | 2.0 | 200% |
| $800 | $6,400 | 8.0 | 800% |
You will see the same value written as a multiple (4), a ratio (4:1) or a percentage (400%). The inverse is ad spend ÷ revenue, which Amazon calls ACoS. A ROAS of 4 equals an ACoS of 25%.
What ROAS tells you and what it leaves out
A ROAS of 4 means each ad dollar produced $4 in revenue. It says nothing about what you kept. ROAS ignores product cost, shipping, payment fees and refunds. If you want the full ROAS meaning and how it compares to ROI, POAS and ACoS, the definition page covers it.
To judge a ROAS, you need one more number: your contribution margin. That is revenue minus every cost that grows with each order, before ad spend. It decides where your break-even sits.
Break-even ROAS from your contribution margin
Break-even ROAS is the point where ads stop losing money. On revenue after returns, it depends on a single number:
Your ad account counts a sale the moment the order comes in. Refunds that follow stay in the conversion value. The middle column below assumes 25% returns and no tax in the conversion value. The last column adds 20% VAT for UK and EU sellers whose tracking reports gross prices.
| Contribution margin | Break-even after returns | In ad account, 25% returns | Plus 20% VAT |
|---|---|---|---|
| 20% | 5.00 | 6.67 | 8.00 |
| 30% | 3.33 | 4.44 | 5.33 |
| 40% | 2.50 | 3.33 | 4.00 |
| 50% | 2.00 | 2.67 | 3.20 |
| 60% | 1.67 | 2.22 | 2.67 |
| 70% | 1.43 | 1.90 | 2.29 |
Returns weigh more than most teams expect. According to the NRF 2025 Retail Returns Landscape, US shoppers were expected to return 19.3% of online sales in 2025. Apparel stores often sit above that. For a matrix of margins and return rates and the step to a profitable target, use the breakeven ROAS calculator.
Why a ROAS of 4 can lose money
An apparel store spends $10,000 a month on Google Ads. The ad account reports $40,000 in revenue, a ROAS of 4. The team is happy. Here is the same month in the store's books:
- A quarter of the orders come back. The store keeps $30,000.
- Product, shipping and payment fees take 70% of that. Contribution margin: $9,000.
- Minus $10,000 in ad spend leaves a $1,000 loss.
This store breaks even at a ROAS of 4.44 in its ad account. Every campaign below that costs money, however good the ROAS looks in the dashboard.
Change two inputs in the calculator and watch the result flip. At 20% returns the store keeps $32,000 and earns $9,600 in contribution margin, still $400 short. At 35% contribution margin and 25% returns it makes $500. Margin and returns decide the outcome. The ROAS stays at 4 in every case.
What is a good ROAS?
Rules like ROAS 4 is good do not help you. A supplement brand with a 60% margin makes money at ROAS 3, and the apparel store above loses money at ROAS 4. A good ROAS is your own break-even plus the profit you want per order.
New customers are the exception. If buyers come back, the first order can sit slightly below break-even. Check that choice with an LTV calculation and your CAC cost per new customer. The LTV:CAC ratio then shows whether the repeat orders pay back what the first one lost.
POAS and MER: the numbers behind ROAS
POAS (profit on ad spend) swaps revenue for contribution margin: contribution margin ÷ ad spend. Above 1 you make money, below 1 you lose it. In the example above, POAS is $9,000 ÷ $10,000 = 0.90.
MER, the marketing efficiency ratio, divides total store revenue by total marketing spend. It does not depend on how each platform assigns credit, so it is the most robust check on whether your marketing pays for itself as a whole.
Ad account or store backend: which number is right?
Google Ads credits a purchase to an ad if it happens within 30 days of the click by default, adjustable from 1 to 90 days. Meta uses its own window and also counts some purchases after someone only viewed an ad. When a buyer touched both channels, both platforms claim the same sale.
Add up the revenue your platforms report and you often get more than your store took in. The number that counts is revenue in your store backend minus refunds. We measure our $100k guarantee on exactly that number.
Setting target ROAS in Google Ads
The target ROAS bid strategy optimizes toward the value you enter. If you enter your break-even after returns while the account reports revenue before refunds, Google will steer you into a loss with great precision. Work the target back from the profit you want:
If your conversion value includes sales tax or VAT, multiply the result by 1 + tax rate. If your tracking already reports revenue after refunds, drop the return factor and the formula becomes 1 ÷ (contribution margin − target profit).
ROAS formula FAQ
What is the formula for ROAS?
ROAS equals revenue from ads divided by ad spend. $4,000 in revenue from $1,000 in ad spend gives you a ROAS of 4, or 400%.
How do I express ROAS as a percentage?
Multiply the ratio by 100. A ROAS of 4 is 400%. Google Ads uses the percentage format when you set a target ROAS.
What is a good ROAS?
One that sits above your break-even ROAS plus the profit you want per order. There is no universal number, because margin, returns and shipping costs differ from store to store.
How do I calculate break-even ROAS?
Divide 1 by your contribution margin. At 40% contribution margin, break-even is 2.5. If your ad account counts orders before refunds, divide that result by 1 minus your return rate.
Should revenue in the ROAS formula include sales tax?
No. Sales tax goes to the state. Most US stores send conversion values without tax. If yours includes it, strip it out before you compare ROAS with your break-even.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend only. ROI subtracts all costs first and shows profit relative to the investment. A ROAS of 4 can go with a negative ROI.
Where is your break-even?
On the intro call, Tobias runs it with the numbers from your store and shows you which campaigns sit below it. 5 quick questions, then straight to booking.
Book your free intro call→