Analytics · 5 min read

ROAS Explained: Formula, Targets and Mistakes

Return on ad spend is simple to calculate and easy to misread. Here's how to use it.

The formula

ROAS = revenue from ads ÷ ad spend. $5,000 revenue from $1,000 spend is a 5x ROAS.

Your break-even ROAS is 1 ÷ profit margin. At a 25% margin you need at least 4x to profit.

ROAS ignores product costs and fees; ROI includes them. Use both.

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