ROAS calculator
ROAS is revenue divided by ad spend: $10,000 in sales from $2,500 of ads is a 4x ROAS (400%). Whether that's profitable depends on your margin, because break-even ROAS is 1 divided by your gross margin, so at a 40% margin you break even at 2.5x.
Calculate your ROAS
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To enter it in Google Ads as a target ROAS, use 333%.
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How it's calculated
ROAS = revenue / ad spendBreak-even ROAS = 1 / gross marginTarget ROAS = 1 / (gross margin - profit share)Profit after ads = revenue x gross margin - ad spend
Google defines target ROAS as the average conversion value you want for each dollar you spend, and gives the example of $5 in sales per $1 of ad spend as a 500% target.[1] The break-even and target formulas follow from the profit line: profit is zero when revenue x margin equals spend, so revenue / spend = 1 / margin.
The default inputs, worked through
A 4x ROAS clears both the break-even and the 10% target, and leaves $1,500, or 15% of revenue, after ad spend.
Break-even ROAS by margin
The same formula for common margins. Find your margin, and anything below the break-even column loses money on the first order.
| Gross margin | Break-even ROAS | As a percent | ROAS for 10% profit |
|---|---|---|---|
| 20% | 5.00x | 500% | 10.00x |
| 25% | 4.00x | 400% | 6.67x |
| 30% | 3.33x | 333% | 5.00x |
| 40% | 2.50x | 250% | 3.33x |
| 50% | 2.00x | 200% | 2.50x |
| 60% | 1.67x | 167% | 2.00x |
| 70% | 1.43x | 143% | 1.67x |
| 80% | 1.25x | 125% | 1.43x |
Mistakes that make ROAS lie
- Using revenue instead of margin. A 3x ROAS on a 25% margin product loses money (break-even is 4x).
- Leaving costs out of margin. Payment fees, returns and fulfillment come out of every sale, not just product cost.
- Trusting one platform's revenue. Google, Meta and your store can all claim the same sale. Check ad-attributed revenue against store orders.
- Judging new customers on the first order. If customers reorder, a first-order ROAS below break-even can still pay back. Decide how long a payback you can fund before you lower the target.
For what counts as a good number for your store, read what is a good ROAS.
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Common questions
How do you calculate ROAS?
Divide the revenue your ads brought in by what you spent on them. $10,000 in revenue from $2,500 of ad spend is 10,000 / 2,500 = 4, written as 4x or 400%. Google's own example is $5 in sales for each $1 of ad spend, a 500% target ROAS.
How do you calculate break-even ROAS?
Break-even ROAS = 1 / gross margin. At break-even, the gross profit from ad sales exactly pays for the ads. With a 40% margin, 1 / 0.40 = 2.5x. With a 25% margin it is 4x.
What target ROAS should I set in Google Ads?
Pick the profit you want to keep as a share of revenue, then use 1 / (margin - profit). With a 40% margin and a 10% profit goal, that is 1 / 0.30 = 3.33x, entered in Google Ads as 333%. Set it near what the campaign already achieves and move it in small steps.
Is a ROAS of 2 good?
Only if your gross margin is above 50%. Break-even ROAS is 1 / margin, so 2x breaks even at exactly 50% margin, makes money above it and loses money below it.
What's the difference between ROAS and ROI?
ROAS compares revenue to ad spend only. ROI compares profit to the total cost. A 4x ROAS can still lose money if product costs, fees and fulfillment eat more than 75% of each sale.
Sources
- About Target ROAS bidding, Google Ads Help. Checked Oct 30, 2026.Google's example: $5 of sales for each $1 of ad spend is a 500% target ROAS.
Every outside number on this page links to its source above, with the date we checked it. RunAds has not published its own account data here.
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