Paid Media
Advanced ROAS Calculator
Plain ROAS flatters almost every account because it ignores the cost of the goods you just sold. This version asks for your cost of goods and other variable costs so you get the number that matters: what is left after the ads and the product are both paid for.
Result
FormulaGross margin ROAS = (revenue × contribution margin %) ÷ ad spend, where contribution margin % = 100% − COGS % − other variable costs %
Worked example
$84,000 of revenue on $21,000 of ad spend is a 4.00x headline ROAS, which looks fine. With 45 percent cost of goods and 8 percent other variable costs, only 47 percent of that revenue is contribution, so gross margin ROAS is 1.88x and profit after ad spend is $18,480. Break-even sits at 2.13x, so the campaign is genuinely profitable, but the honest cushion is far smaller than 4x suggests.
What to watch for
Break-even ROAS is the single most useful number on this page. Once you know it, every bid decision becomes arithmetic instead of argument, and you stop pausing campaigns that were actually clearing the bar.
Platform-reported revenue is optimistic. Meta and Google both credit themselves for conversions the other also claims, so I run this calculation with revenue from the store or CRM, not from the ad platform, whenever the two disagree by more than a few percent.
If your contribution margin is under 30 percent, paid acquisition alone will rarely carry the business. The fix is usually pricing, bundle size, or repeat rate rather than a better media buyer.
Frequently asked questions
What is a good ROAS?
Any number above your break-even ROAS. If your contribution margin is 47 percent, break-even is roughly 2.13x, and a 3x campaign is making money. Copying someone else's 4x benchmark from a different margin structure is how accounts get paused for no reason.
Should I include fixed costs in this?
Not here. This measures whether an incremental dollar of ad spend pays for itself. Fixed costs like rent and salaries belong in your overall profit and loss, not in a per-campaign bidding decision.
Why is my blended ROAS lower than my platform ROAS?
Because blended ROAS divides all revenue by all spend and includes organic, email and repeat orders that platforms happily take credit for. Blended is the safer number for budget decisions, platform ROAS is the better number for comparing two campaigns inside the same account.
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This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.