ROAS calculator
Updated
This ROAS calculator works out your return on ad spend: the sales your ads brought for each $1 you spent. Add your profit margin to see the ROAS you need just to break even.
How do you calculate ROAS?
ROAS is the value of the sales your ads brought divided by what the ads cost. Google's own example: $5 in sales for every $1 of ad spend is a ROAS of 500%, or 5×. In Google Ads, the sales figure is the Conv. valuecolumn, so ROAS only works if your conversions carry real values, such as the order total from your shop.
What is a good ROAS?
It depends on your profit margin, not on an industry average. A sale only pays for the ad if the profit on it covers the ad's cost, so the break-even ROAS is 1 divided by your margin:
| Profit margin | Break-even ROAS |
|---|---|
| 20% | 5.0× (500%) |
| 30% | 3.3× (333%) |
| 40% | 2.5× (250%) |
| 50% | 2.0× (200%) |
| 60% | 1.7× (167%) |
Above break-even the ads make money. Below it, they cost more than the profit on the sales they bring.
A worked example
Say an online shop spends $1,000 on Google Ads in a month and the ads bring $3,000 in sales: a ROAS of 3× (300%). At a 40% margin the break-even ROAS is 2.5×, so the ads are profitable: $1,200 of profit on the sales, minus $1,000 for the ads, leaves $200. At a 30% margin the same 3× ROAS loses $100, because break-even is 3.3×. (These numbers are made up to show how the calculator works.)
ROAS vs ROI
ROAS compares sales with ad spend. ROI compares profit with cost, so it also counts what the products cost you. In the example above, ROAS is 3×, but $200 of profit on $1,000 of ads is a 20% return.
ROAS and target ROAS in Google Ads
With target ROAS bidding, Google tries to keep your conversion value per cost equal to the target you set, and it needs values on your conversions first (About target ROAS bidding). A target below your break-even ROAS tells Google that losing money on the average sale is fine. If your ROAS today is below break-even, raise the target in steps rather than in one jump, because a high target can cut how often your ads show.
What to do next
A low ROAS often comes from a few products or placements that spend without selling. Seeproducts with no sales, and theCPC calculator for what your clicks cost. The free SpendCanary scan shows where your Performance Max money went and which products spent without a sale.