Handeware
Business

Return on ad spend (ROAS)

4
Break-even ad spend
$3,200.00

This is arithmetic for general information, not financial advice.

ROAS Calculator

ROAS, or return on ad spend, is the revenue an ad campaign brings in for each unit of money spent on it. Break-even ad spend is the most you can spend before the ads stop paying for themselves.

How it works

ROAS is the revenue from the ads divided by the ad spend. A ROAS of 4 means 4 of revenue for each 1 spent.

Break-even ad spend is the revenue times your profit margin. Spending more than that on the campaign means the spend costs more than the profit it earns.

Worked example

Spending $2,000.00 on ads brought in $8,000.00, a return of 4 for each unit spent. At your margin, the most you could spend and still break even is $3,200.00.

Questions

Is ROAS the same as profit?

No. ROAS counts revenue, not what is left after costs. Use the break-even figure to see the profit side.

What margin should I enter?

Use the share of each sale you keep after the cost of the product, shipping and fees.

Does this include other marketing costs?

Only the spend you type in. Add other ad and staff costs to that figure if you want a fuller picture.

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