Return on ad spend (ROAS) is how much revenue you get back for every $1 you spend on ads.
The calculator also works when your ads bring in quote requests instead of online orders. Add your close rate and average deal size, and it shows what each quote request is worth and the most you can pay for one.
If you judge your ads by ROAS alone, a campaign can look healthy and still lose money, because ROAS ignores what the product costs you.
What is ROAS?
ROAS is the revenue your ads brought in divided by what the ads cost. A ROAS of 4x means every $1 spent on ads brought back $4 in revenue.
Google Ads writes ROAS as a percentage, so 4x shows up as 400%. The Google Ads column for it is called Conv. value / cost (Google Ads Help on conversion columns).
So a 2.5 ROAS means $2.50 in revenue for each $1 of ad spend. Whether that’s good depends on your margin.
What is a good ROAS?
A good ROAS is any ROAS above your break-even ROAS, which is 1 divided by your gross margin. No single number is good for every business. A 4x ROAS makes money at a 40% margin and loses money at a 20% margin.
This table shows profit or loss on $1,000 of ad spend, after product cost:
| ROAS | 20% margin | 30% margin | 40% margin |
|---|---|---|---|
| 2x (200%) | −$600 | −$400 | −$200 |
| 2.5x (250%) | −$500 | −$250 | $0, break-even |
| 3x (300%) | −$400 | −$100 | +$200 |
| 4x (400%) | −$200 | +$200 | +$600 |
For example, a 2.2 ROAS loses money unless your margin is 46% or more. A 3.8 ROAS makes money at any margin of 27% or more.
You’ll often see 4x quoted as a good ROAS. A 4x ROAS makes money only when your margin is above 25%, because 4x is the break-even point at 25%.
Your margin sets the bar for a good ROAS.
How to read your ROAS
Your ROAS falls into 1 of 4 zones, and each zone calls for a different decision. The scale under your ROAS in the ROAS calculator shows the same zones: red below break-even, green above it, and a marker for your goal. Without a gross margin, the scale marks 1x instead of break-even.
| Your ROAS | What it means | What to do |
|---|---|---|
| Below 1x | The ads cost more than the revenue they brought in | Fix or pause the campaign before you spend more |
| 1x up to break-even | Revenue covers the ads but not the product cost | Cut waste first: search terms, keywords, and locations that never convert |
| Break-even up to your goal | The ads make money, but less than you want | Shift budget toward the keywords that already convert |
| At or above your goal | The ads keep the profit you asked for | Add budget a step at a time while ROAS holds |
What a ROAS calculation looks like
A ROAS calculation divides revenue by ad spend. For example, a month of ads with these numbers:
Ad spend: $1,000
Orders: 20
Revenue from ads: $4,000
Gross margin: 35%| Result | Math | Answer |
|---|---|---|
| ROAS | $4,000 ÷ $1,000 | 4.00x, or 400% |
| Cost per order | $1,000 ÷ 20 | $50.00 |
| Break-even ROAS | 1 ÷ 0.35 | 2.86x |
| Profit after ads | $4,000 × 0.35 − $1,000 | $400.00 |
This campaign is above its break-even ROAS of 2.86x, so it made money. If margin were 20% instead, the same 4x ROAS would be a $200 loss.
The inputs
The ROAS calculator needs 2 numbers to start. Each number you add in step 2 fills in another result.
| Input | Step | What it does | Example |
|---|---|---|---|
| Ad spend | 1 | What you paid for the ads, the Cost column in Google Ads | 1000 |
| Revenue | 1 | What those conversions sold for, the Conv. value column. In quote mode, leave it blank to estimate it | 4000 |
| Conversions | 2 | Orders or quote requests from the ads, the Conversions column | 20 |
| Average order value or deal size | 2 | The value of 1 sale. For online sales, it fills in from revenue ÷ orders | 200 |
| Gross margin | 2 | What’s left of each sale after product cost and freight | 35 |
| Close rate | 2, quote mode only | How many quote requests turn into orders | 20 |
| Profit goal | 2 | Profit you want to keep from each sale after ads | 10 |
Enter percentages as whole numbers. If you type 0.35, the ROAS calculator asks whether you meant 35% and fixes it with one click.
What is break-even ROAS?
Break-even ROAS is the ROAS where your ads pay for themselves and nothing more. The formula is 1 divided by your gross margin. At a 35% margin, break-even ROAS is 1 ÷ 0.35, or 2.86x.
Above break-even, the ads make money after product costs. Below it, every sale from the ads loses money, even when ROAS looks high.
| Gross margin | Break-even ROAS | In Google Ads |
|---|---|---|
| 20% | 5.00x | 500% |
| 25% | 4.00x | 400% |
| 30% | 3.33x | 333% |
| 35% | 2.86x | 286% |
| 40% | 2.50x | 250% |
| 50% | 2.00x | 200% |
A lower margin needs a higher ROAS. For example, a common mistake is aiming for a 4x ROAS no matter what you sell:
| Product | Margin | ROAS | Result on $1,000 of ads |
|---|---|---|---|
| Replacement motors | 20% | 4x | $200 loss |
| Spec-grade fans | 40% | 4x | $600 profit |
The same 4x ROAS loses money on the motors and makes money on the fans. Each product line needs its own break-even.
Cost per acquisition and break-even CPA
Cost per acquisition (CPA) is your ad spend divided by your conversions. Google Ads calls it cost per conversion, the Cost / conv. column (Google Ads Help on conversion columns).
Break-even CPA is the most you can pay for 1 conversion before you lose money. For online sales, it’s your average order value times your gross margin. A $200 order at a 35% margin leaves $70, so $70 is your break-even CPA.
Quote requests need one more step, because not every request turns into an order:
| Step | Math | Example |
|---|---|---|
| Value of 1 quote request | Average deal size × close rate | $5,000 × 20% = $1,000 |
| Break-even cost per quote request | Value of 1 quote request × gross margin | $1,000 × 30% = $300 |
| Cost per quote request at a 10% profit goal | Value of 1 quote request × (margin − goal) | $1,000 × 20% = $200 |
Choose Quote requests at the top of the ROAS calculator to get these numbers. Without a close rate, there’s no way to tell whether a $150 quote request is cheap or expensive.
Setting target ROAS and conversion value in Google Ads
Target ROAS is a Google Ads bid strategy that aims for the ROAS you set, written as a percentage. A target of 500% asks for $5 in sales for every $1 of ad spend (Google Ads Help on target ROAS).
To set a target that keeps your profit goal:
- Enter your gross margin and profit goal in the ROAS calculator above.
- Copy the box labeled Target ROAS to enter in Google Ads.
- In Google Ads, open the campaign’s bid strategy and choose Target ROAS.
- Paste the percentage and save.
For Search campaigns, Google asks for at least 15 conversions in the last 30 days before you use Target ROAS (Google Ads Help on target ROAS). With fewer, start with a lower target than the calculator shows and raise it as conversions come in.
Target ROAS needs a dollar value on each conversion. Quote requests don’t come with one, so give them a fixed value (Google Ads Help on the same value for each conversion):
- Choose Quote requests in the ROAS calculator and fill in your deal size and close rate.
- Copy the box labeled Value of 1 quote request.
- In Google Ads, click Goals, then Conversions, then Summary.
- Click your quote request conversion action, then Edit settings.
- Under Value, choose the same value for each conversion, paste the number, and save.
The new value counts only for conversions after the change. Once it’s set, the Conv. value / cost column shows ROAS on your leads.
Don’t want to deal with any of this? Take a look at our Google Ads management service, and we’ll set up the tracking and run the ads for you.
Rules for reading ROAS
| Rule | Use | Avoid |
|---|---|---|
| Compare against your own break-even | 1 ÷ your gross margin | A 4x rule from a blog post |
| Use gross margin | Revenue minus product cost | Revenue alone |
| Give quote requests a value | Deal size × close rate | A value of 1 on every lead |
| Judge a full month | 30 days and 30 or more conversions | A single good or bad week |
| Split by product line | A break-even per margin | One target for the whole account |
Google recommends judging a bid strategy over at least 30 days and 30 conversions (Google Ads Help on target CPA). Shorter windows swing too much to act on.
Check break-even before you raise or cut a budget.
How the ROAS calculator works
The ROAS calculator works in 2 steps, and step 2 is optional.
- Choose Online sales or Quote requests at the top.
- In step 1, enter your ad spend and revenue. Your ROAS shows right away, on a scale that marks break-even.
- In step 2, add conversions, margin, close rate, or a profit goal. Each one fills in more results, and Copy results copies them all as plain text.
The ROAS calculator uses these formulas. Margin, close rate, and profit goal are entered as percentages and used as decimals.
| Result | Formula |
|---|---|
| ROAS | Revenue ÷ ad spend |
| Cost per conversion | Ad spend ÷ conversions |
| Profit after ads | Revenue × margin − ad spend |
| Break-even ROAS | 1 ÷ margin |
| Value of 1 conversion, online sales | Average order value, or revenue ÷ orders when left blank |
| Value of 1 conversion, quote requests | Average deal size × close rate |
| Revenue estimate, quote requests | Quote requests × close rate × average deal size, used only when revenue is blank |
| Break-even cost per conversion | Value of 1 conversion × margin |
| Target ROAS | 1 ÷ (margin − profit goal), shown as a percentage |
| Cost per conversion at your goal | Value of 1 conversion × (margin − profit goal) |
When the profit goal is as high as the margin, no ROAS can reach it, and the ROAS calculator offers to clear the goal. Everything runs in your browser. Nothing you type leaves your computer.
Where to find these numbers in Google Ads
Google Ads shows every input the ROAS calculator needs on the Campaigns page.
- Open Campaigns and set the date range to the last full month.
- Click the Columns icon and add Conversions, Conv. value, Cost / conv., and Conv. value / cost.
- Copy Cost, Conversions, and Conv. value into the ROAS calculator.
Your gross margin and close rate come from your own books and your sales team, not from Google Ads.
Questions we get
What is the difference between ROAS and ROI?
ROAS compares revenue to ad spend only, while return on investment (ROI) compares profit to every cost: the product, the ads, the agency fee, and your team's time. A campaign can show a 3x ROAS and still lose money once product costs come out, so the ROAS calculator also shows profit after ads.
How is ROAS different from ACOS?
Advertising cost of sales (ACOS) is ROAS turned upside down: ad spend divided by revenue. Amazon Ads reports ACOS, and Google Ads reports ROAS. A 4x ROAS is the same as a 25% ACOS, so you can convert either number to the other in one step.
What costs go into gross margin for break-even ROAS?
Gross margin for break-even ROAS is the sale price minus every cost of filling that order: the product, inbound and outbound freight, card fees, and any rebates you pay out. Leave out fixed costs like rent and salaries. Break-even ROAS is 1 divided by gross margin, so a 40% margin breaks even at 2.5x.
Should repeat customers lower my target ROAS?
Repeat customers can lower your target ROAS, but only if your own records show them. A contractor who finds you through an ad and reorders 4 times a year is worth more than the first order. Count only reorders you can see in your sales records. Without them, treat first-order break-even ROAS as your floor.
Is anything I type into this ROAS calculator saved or sent?
The ROAS calculator saves and sends nothing you type. It runs in your browser, nothing you enter leaves your computer, and nothing is stored after you close the page. It needs only 2 numbers to start, and each number you add in step 2 fills in another result.