ROAS (return on ad spend) is the revenue you generate divided by what you spent on ads. €4,500 of revenue from €1,000 of ad spend is a ROAS of 4.5, or 4.5 : 1. Whether that is profitable depends on your margin: at a 30% margin the break-even ROAS is 3.33, so 4.5 leaves €350 profit.
What is ROAS?
Return on ad spend measures how many euros of revenue each euro of advertising brings in: ROAS = revenue ÷ ad spend. Google Ads, Meta and marketplaces report it directly. A ROAS of 4 means €4 of revenue for every €1 spent, often written as 400%. ACOS (advertising cost of sales) is the inverse: ad spend ÷ revenue, so a ROAS of 4 equals an ACOS of 25%. Amazon sellers favour ACOS, while Google and Meta marketers favour ROAS.
What is a good ROAS?
There is no universal good number, because profitability depends on your margins. A common rule of thumb is 4:1, but a store with a 20% margin needs 5:1 just to break even, while a software company with 80% margins could be profitable at 1.25:1. That is why the calculator reports break-even ROAS: 1 ÷ margin. Find your own number in the break-even ROAS calculator, which works from product price and cost, and then aim above it.
| Gross margin | Break-even ROAS | ACOS at break-even |
|---|---|---|
| 20% | 5.00 | 20% |
| 30% | 3.33 | 30% |
| 40% | 2.50 | 40% |
| 50% | 2.00 | 50% |
Common mistakes with ROAS
- Including BTW in revenue. In the Netherlands, 21% of a consumer price goes to the tax office. Use revenue excluding BTW; the BTW calculator converts it.
- Ignoring returns and shipping. A ROAS of 4 is not the same after 15% returns.
- Ignoring fixed costs. ROAS only compares revenue with ad spend, not with staff, tools or overhead.
- Mixing attribution windows. A 7-day click window and a 1-day view window report different numbers for the same campaign.
Improving ROAS
You can raise revenue (better conversion rate, higher basket size, repeat customers) or cut spend (negative keywords, better audiences, creative testing). Raising prices is the fastest lever if the market allows, since it increases the margin. For a long-term view, compare ROAS with customer lifetime value, and model the effect of reinvested profits with the compound interest calculator. If you invoice as a freelancer, see how this revenue ends up in the ZZP calculator.
How to use this calculator
- Enter the total ad spend for the period.
- Enter the revenue those ads produced, excluding BTW.
- Add your gross margin to see profit and break-even ROAS.
- Compare the result with the break-even ROAS before scaling the budget.
Key figures at a glance
| ROAS | revenue ÷ ad spend |
|---|---|
| ACOS | ad spend ÷ revenue |
| Break-even ROAS | 1 ÷ gross margin |
| Use revenue | Excluding BTW |
Frequently asked questions
Divide revenue from ads by the ad spend. €6,000 of revenue on €1,500 spend is a ROAS of 4.
ROAS only compares revenue with ad spend. ROI compares profit with total investment.
Advertising cost of sales: ad spend divided by revenue, expressed as a percentage.
It depends on margin. 4:1 is a common benchmark, but your break-even ROAS is the number that matters.
No. Use revenue excluding BTW, since that is the money you keep.