ROAS Calculator
Calculate Return on Ad Spend and advertising profitability. Enter your budget, CPC or CPM, conversion rate, and average cart to get ROAS + estimated profit.
Understanding ROAS & Ad Profitability
What is ROAS (Return on Ad Spend)?
ROAS measures how much revenue you generate for every dollar spent on advertising. ROAS = Revenue from ads ÷ Ad spend. A ROAS of 3x means you earn $3 for every $1 spent. It's the primary metric for evaluating paid campaigns on Google Ads, Meta, LinkedIn, TikTok, and other platforms. Unlike ROI, ROAS focuses on revenue (not profit), so it's simpler to track but doesn't account for product costs.
The ad funnel: Budget → Clicks → Conversions → Revenue
Your ad revenue follows: Budget → Clicks (from CPC or CPM+CTR) → Conversions (clicks × conversion rate) → Revenue (conversions × cart value). With CPC, Clicks = Budget ÷ CPC. With CPM, Impressions = (Budget ÷ CPM) × 1000, then Clicks = Impressions × CTR. Each step converts a percentage of the previous—optimizing conversion rate and cart value directly improves ROAS.
CPC vs CPM: which to use?
- CPC (Cost Per Click) — You pay when someone clicks. Best for conversion-focused campaigns (SaaS, e-commerce, lead gen). Directly ties spend to traffic.
- CPM (Cost Per Mille) — You pay per 1,000 impressions. Best for brand awareness or when CTR is predictable. Requires CTR to estimate clicks and conversions.
Frequently Asked Questions
ROAS (Return on Ad Spend) measures how much revenue you generate for every dollar spent on advertising. Formula: ROAS = Revenue from ads / Ad spend. A ROAS of 3 means you earn $3 for every $1 spent. ROAS is the key metric for evaluating paid ad campaigns on Google, Meta, LinkedIn, and other platforms.
A good ROAS depends on your margins and goals. ROAS below 1 means you're losing money. ROAS 1-2 is break-even to modest profit. ROAS 2-4 is healthy for most SaaS and e-commerce. ROAS 4+ is strong performance. Consider your gross margin: if margin is 50%, you need at least 2x ROAS to break even on ad spend alone.
ROAS (Return on Ad Spend) = Revenue / Ad spend. ROI (Return on Investment) = Profit / Ad spend. ROAS measures revenue; ROI measures profit. If you spend $100 and make $300 revenue with $150 in costs, ROAS = 3x but profit = $50, so ROI = 50%. ROAS is simpler and commonly used for ad performance; ROI is better for true profitability.
CPC (Cost Per Click) is what you pay when someone clicks your ad. CPM (Cost Per Mille) is what you pay per 1,000 impressions (views). CPC is used for performance campaigns focused on clicks and conversions. CPM is used for brand awareness or when you pay for reach. To estimate clicks from CPM, multiply impressions (Budget/CPM × 1000) by CTR.
To improve ROAS: 1) Lower CPC/CPM with better targeting and creatives. 2) Increase conversion rate with landing page optimization and clear CTAs. 3) Increase average order value with upsells or higher-ticket offers. 4) Retarget warm audiences. 5) Use lookalike audiences based on your best customers.