How this calculator works
| Metric | Formula |
|---|---|
| ROAS | revenue from ads ÷ ad spend |
| Break-even ROAS | 1 ÷ gross margin |
| Target ROAS | 1 ÷ (gross margin − target profit margin) |
| ACoS | ad spend ÷ revenue from ads (= 1 ÷ ROAS) |
Worked example
With these inputs:
- Currency: USD ($)
- Ad spend: 5,000
- Revenue from ads: 20,000
- Gross margin: 40%
- Agency, tool & creative fees: 0
- Target net profit margin: 10%
Return on ad spend (ROAS): 4x. $20,000 revenue from $5,000 ad spend is a 4x ROAS; break-even at a 40% margin is 2.5x.
| Break-even ROAS (ad spend only) | 2.5x |
|---|---|
| Break-even ROAS incl. fees | 2.5x |
| Target ROAS for 10% profit | 3.33x |
| Gross profit from ads | $8,000 |
| Net profit after ad spend and fees | $3,000 |
| Advertising cost of sales (ACoS) | 25% |
Open this example in the calculator
Break-even ROAS by gross margin
Low-margin products need a much higher ROAS to be profitable, which is why a “good” ROAS differs so much between businesses.
| Gross margin | Break-even ROAS | ROAS for 10% profit |
|---|---|---|
| 20% | 5x | 10x |
| 30% | 3.33x | 5x |
| 40% | 2.5x | 3.33x |
| 50% | 2x | 2.5x |
| 60% | 1.67x | 2x |
| 70% | 1.43x | 1.67x |
| 80% | 1.25x | 1.43x |
What is a good ROAS?
There is no universal good ROAS. A 3x ROAS is very profitable for software with an 80% margin and loss-making for a reseller with a 25% margin.
Also consider customer lifetime value: if customers buy again, a first-order ROAS below break-even can still be profitable over time. The customer lifetime value calculator helps here.
How to improve ROAS
- Raise conversion rate with faster, clearer landing pages.
- Increase average order value with bundles and upsells.
- Move budget from broad campaigns to high-intent keywords and audiences.
- Exclude poor-performing placements, search terms and regions.
- Send real sales and margin data back to the ad platform so bidding optimises for profit.
Open this calculator with your numbers
Every option can be set in the web address, so you can bookmark a scenario or send it to a colleague. AI assistants such as ChatGPT, Gemini, Claude and Perplexity can use the same parameters to open this calculator with your numbers and the result already on the page.
| Parameter | What it sets | Accepted values |
|---|---|---|
currency |
Currency | one of USD, INR, AED, GBP, EUR |
spend |
Ad spend | number from 0 to 1000000000 (in the chosen currency), default 5000 |
revenue |
Revenue from ads | number from 0 to 10000000000 (in the chosen currency), default 20000 |
margin |
Gross margin | number from 1 to 100 (%), default 40 |
fees |
Agency, tool & creative fees | number from 0 to 100000000 (in the chosen currency), default 0 |
target_profit |
Target net profit margin | number from 0 to 99 (%), default 10 |
Also available as plain text for AI assistants and a free JSON API (OpenAPI spec).
Last reviewed by the Infikey Technologies team.
Disclaimer
This calculator is provided free for general information and planning only. Results are estimates based on the inputs you enter and the assumptions described on this page, reference data such as published prices may change, and actual costs and outcomes will differ. Nothing on this page is financial, legal, tax, investment or other professional advice. Infikey Technologies Private Limited, Infikey Technologies LLC and their directors, employees and affiliates make no warranty, express or implied, about the accuracy, completeness or suitability of this tool or its results, and accept no liability for any loss or damage, direct or indirect, arising from its use or from reliance on its results. Verify all figures independently and seek professional advice before making any decision. Use of this tool is at your own risk.