ROAS Calculator (Return on Ad Spend)
ROAS measures how much revenue you generate for every €/$ spent on ads. It is the inverse metric to COS – higher ROAS = better efficiency.
ROAS Benchmarks
ROAS vs. Profit
Warning: ROAS does not account for product margin. ROAS 3:1 might be profitable at 50% margin, but loss-making at 20% margin. Always calculate actual profit = (Revenue × margin %) - ad spend.
How to improve ROAS
- › Improve Conversion Rate: same cost → more revenue
- › Increase AOV: bigger baskets for the same acquisition cost
- › Retargeting: usually has 2-3x higher ROAS than cold prospecting
- › Product Mix: push high-margin products in paid campaigns
- › Seasonality: Christmas, Black Friday naturally have higher ROAS
Frequently Asked Questions (FAQ)
What ROAS is "good"?
There is no universal number. It depends on your margin. If you have 50% margin, ROAS 2:1 is break-even. If you have 10% margin, you need ROAS 10:1. Generally in e-commerce, ROAS 4:1 (400%) is considered a healthy standard.
Why high ROAS can be a problem?
If you have ROAS 20:1, you are likely "under-investing" and only reaching brand-loyal customers who would buy anyway. High ROAS often means you are investing too little in acquiring new customers (prospecting), which kills growth in the long run.
How to calculate Break-Even ROAS?
The formula is: 1 / Margin. If you have 25% margin (0.25), your Break-Even ROAS is 1 / 0.25 = 4. Any ROAS above 4 is profit, below 4 is loss.
Why it matters
ROAS is the global standard for measuring campaign performance. It allows you to easily compare the
efficiency of different channels (e.g. FB vs Google Ads vs TikTok). While COS focuses on "pain" (cost),
ROAS focuses on "reward" (revenue).
It is a psychologically better frame for scaling and growth. Saying "I got 5 dollars for every dollar"
sounds better than "I spent 20% of revenue". But beware of blindly following ROAS without margin context –
that is the most common path to e-shop bankruptcy.