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ROAS Calculator

Return on ad spend including gross margin. The honest version of marketing ROI — accounts for the actual profit your spend produces.
ROAS
3.00x
Profitable ROAS
2.10x
Gross profit generated
$105K
Breakeven ROAS
1.43x
What this meansYou earn $105K in gross profit on $50K of ad spend. Profitable ROAS = profit ÷ spend. Above 1.0x means the channel is profitable on first purchase. Below 1.0x means you're betting on retention or LTV to make it back.
Benchmarks (channel-dependent)
  • ≥ 4x ROASStrong scale potential
  • 2–4xHealthy
  • 1–2xWorkable; depends on LTV
  • < 1xLosing money on first purchase

What is the roas calculator?

ROAS = Revenue ÷ Ad Spend. A 4.0x ROAS means $4 of revenue per $1 of ad spend.

Profitable ROAS = Gross Profit ÷ Ad Spend. A 1.0x profitable ROAS means you broke even on first purchase. Below 1.0 means you lose money on the first transaction and need retention/LTV to make it back.

Breakeven ROAS = 1 / Gross Margin. At 50% margin, you need 2.0x ROAS just to break even.

Why this matters for founders & operators

Most marketers report headline ROAS without margin context. A "5x ROAS" sounds great until you realize gross margin is 20% — that's a 1.0x profitable ROAS, breakeven at best.

For SaaS with 75-85% gross margin, healthy ROAS is 3-5x. For ecommerce with 30-40% gross margin, you need much higher ROAS (6-10x) to be profitable on first purchase.

How to use this calculator

  1. 1
    Use trackable revenue only

    Don't include revenue you can't attribute to the spend. Last-click is imperfect but consistent — better than wishful thinking.

  2. 2
    Use accurate gross margin

    Different channels can have different effective margins (e.g., partnerships have rev share). Match margin to the actual deal economics.

  3. 3
    Distinguish first-purchase vs LTV math

    ROAS measures first transaction. Profitable channels often need 6-12 months of retention to pay back. See our channel-breakeven calculator for that math.

FAQ

What's a healthy ROAS for SaaS?+
3-5x with 75%+ gross margin = profitable on first transaction. Many SaaS companies operate at 1-3x ROAS and rely on LTV to make the spend pay back over 12-18 months.
Should I include payment processing fees?+
Yes — net them out of revenue or include them in COGS for the gross margin calc. They're usually 2-3% but matter at scale.
Why is profitable ROAS more useful than headline ROAS?+
Profitable ROAS accounts for what actually flows to the bottom line. Headline ROAS can mask losses if margins are thin.
What's the relationship between ROAS and CAC?+
ROAS measures the same channel from the dollar-out side; CAC measures from the customer-in side. Both useful — ROAS for channel-level decisions, CAC for cohort-level decisions.