ROAS Calculator
Return On Ad Spend — revenue per rupee invested.
Your numbers
ROAS
6.0×
Revenue
₹6.00 L
Ad spend
₹1.00 L
Return per ₹1
₹6
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Definition
Return on ad spend (ROAS) is the revenue earned for every rupee of advertising: revenue divided by ad cost. A ROAS of 4 — written 4:1 or 400% — means ₹1 of ads returned ₹4 of revenue. It measures revenue efficiency, not profit.
The formula
ROAS = Revenue from ads ÷ Ad spend
Note what is missing: cost of goods, shipping, returns and the agency fee. ROAS is a revenue ratio, which is why a campaign can post a proud 4x and still lose money. It is a useful steering metric and a dangerous target.
A worked example
A D2C brand on Meta, one month
- 1Ad spend: ₹3,00,000. Revenue attributed to those ads: ₹12,00,000.
- 2ROAS = 12,00,000 ÷ 3,00,000 = 4.0. On the dashboard this looks excellent.
- 3But gross margin is 35%, so those sales carry ₹4,20,000 of gross profit.
- 4Subtract ₹3,00,000 of ad spend and a ₹45,000 management fee: ₹75,000 left.
A 4x ROAS produced a 6% net margin on that revenue. Profitable, but nowhere near what the headline number suggests — and at 30% gross margin instead of 35%, the same campaign would have lost money.
How to move the number
Know your break-even ROAS first
Break-even ROAS is 1 divided by your gross margin. At 40% margin you need 2.5x just to stand still. Until you have that number written down, every ROAS target you set is arbitrary.
Improve margin, not just revenue
Raising average order value or gross margin lifts profitable ROAS without touching the ad account. Bundles, shipping thresholds and a better product mix routinely beat another round of creative testing.
Fix the signal you feed the algorithm
Meta and Google optimise on the conversion data they receive. Server-side tracking, clean event values and accurate revenue passed back typically improve measured and real ROAS at the same time.
Separate branded from non-branded
Branded search posts spectacular ROAS because those buyers were already coming. Reporting it inside a blended number makes an unprofitable prospecting campaign look acceptable.
Where people get this wrong
- Treating ROAS as profit. It is revenue over spend, and it ignores cost of goods entirely.
- Setting the same ROAS target across products with different margins, which starves the profitable ones.
- Trusting platform-reported ROAS without reconciling it against actual sales — Meta and Google both count conversions the other also claims.
- Optimising to maximum ROAS. The highest-ROAS setup is usually a tiny branded campaign; total profit is almost always higher at a lower ROAS and more volume.
ROAS Calculator — questions we get
What is a good ROAS?
Any ROAS above your break-even, which is 1 divided by your gross margin. A business with 25% margins needs 4x to break even; one with 70% margins is profitable at 1.5x. Quoting a universal good ROAS without knowing margin is meaningless.
Is ROAS the same as ROI?
No. ROAS is revenue divided by ad spend. ROI is profit divided by total investment, so it accounts for cost of goods, fees and overheads. A campaign can have a 4x ROAS and a negative ROI, and in low-margin categories that happens routinely.
Why does Google Ads report a different ROAS from Shopify?
Attribution windows and models differ, and both platforms claim conversions the other also counts. Platform numbers are for optimising within that platform; your own back-end revenue is what you should judge the business on.
Should I use ROAS for lead generation?
Only with modelled values. Assign a realistic value to a lead — average deal value multiplied by close rate — and feed that back as the conversion value. Without it you are optimising toward lead volume, which is not the same as revenue.
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