Any ROAS above your break-even ROAS makes money. A 3x ROAS is great for a store with a 70% margin and loses money for one with a 25% margin.

What is break-even ROAS?

The ROAS at which revenue from ads covers the ad spend and all variable costs of those orders, so profit is zero. Below it, every sale from ads loses money.

Should ROAS use revenue with or without tax?

Without sales tax or VAT, and ideally after refunds. Ad platforms often report revenue with tax, which makes ROAS look better than it is.

What is the difference between ROAS and POAS?

ROAS divides revenue by ad spend; POAS divides profit by ad spend. POAS above 1 means the ads make money.

ROAS calculator

Get your return on ad spend, and the break-even ROAS you need to stop losing money, counting product cost, shipping, payment fees and returns, not just your product margin.

Ad spend

Revenue from ads (without tax)

Your costs, as a % of revenue

Product margin

Shipping and fulfillment

Payment fees

Returns and refunds

ROAS4.00x

Break-even ROAS (real)2.38x

Break-even ROAS (1 ÷ product margin)1.67x

Profit after ads$680.00

POAS1.68x

Your ads make money: the ROAS is above your real break-even.

How to calculate ROAS

ROAS (return on ad spend) is the revenue from your ads divided by what you spent on them: ROAS = revenue ÷ ad spend. $5,000 of sales from $1,000 of ads is a 5x ROAS.

Your real break-even ROAS

The break-even ROAS is the ROAS at which an ad pays exactly for itself. It is 1 ÷ contribution margin, where the contribution margin is what is left of each sale after product cost, shipping, payment fees and returns.

The common shortcut, 1 ÷ product margin, leaves those costs out and makes the break-even look lower than it is. With a 60% product margin the shortcut says 1.67x, but with 10% shipping, 3% fees and 5% returns the real break-even is 2.38x.

Why ROAS is not enough

Two campaigns with the same ROAS can make very different profit if they sell products with different margins. That is why stores that grow profitably optimize for profit (POAS) instead of revenue.

Go deeper in the guide ROAS formula: how to calculate return on ad spend.