What is ROAS and how is it calculated?

ROAS stands for Return on Ad Spend. It is calculated by dividing the revenue generated by your ads by the amount you spent on those ads: ROAS = Revenue / Ad Spend. A ROAS of 4 means you earned £4 for every £1 spent on advertising.

It depends on your margins. A commonly cited e-commerce benchmark is 4× (400%), because after roughly 25% COGS and other overheads there is still profit left. However, a luxury retailer with 70% margins may be profitable at 2×, while a low-margin grocery seller may need 8× or higher. Use the break-even ROAS figure in this calculator — it is personalised to your COGS.

What is break-even ROAS?

Break-even ROAS is the minimum ROAS at which your ad revenue exactly covers the cost of goods sold (COGS). The formula is: Break-even ROAS = 1 / (1 - COGS%). For example, if your COGS is 40%, break-even ROAS = 1 / 0.60 = 1.67×. Any ROAS above this number means your gross profit covers the ad spend; below it and you are losing money even before overheads.

What is the difference between ROAS and ROI?

ROAS measures the revenue return per pound of ad spend (Revenue / Spend). ROI measures the net profit return on total investment ((Profit - Cost) / Cost). ROAS is a marketing efficiency metric that ignores COGS and overheads; ROI is a broader profitability measure. For a full picture of campaign profitability, look at POAS (Profit on Ad Spend), which this calculator also provides.

What is POAS (Profit on Ad Spend)?

POAS is Profit on Ad Spend, calculated as (Gross Profit - Ad Spend) / Ad Spend, where Gross Profit = Revenue × (1 - COGS%). Unlike ROAS, which uses revenue, POAS uses actual profit as the numerator — giving a more accurate picture of whether your ads are making you money after the cost of goods.

Should I use ROAS or POAS to optimise my campaigns?

ROAS is easier to compute and the standard metric in ad platforms, but optimising purely for ROAS can mislead you if margins vary by product. POAS corrects for this by factoring in COGS. For a single-product campaign with stable margins, ROAS target-setting works well. For multi-SKU catalogues with varying margins, POAS (or margin-adjusted ROAS) gives a more accurate optimisation signal.

ROAS Calculator — Gera Tools

ROAS — Return on Ad Spend — is the single most-watched number in performance marketing. It tells you how many pounds of revenue your advertising generated for every pound you spent. A ROAS of 5× means £5 returned for every £1 invested in ads. But a raw ROAS number without context can mislead: a 3× ROAS is a disaster if your cost of goods is 80%, and a 2× ROAS can be highly profitable if you sell high-margin digital products.

This calculator goes beyond the basic formula. Enter your ad spend, the revenue those ads produced, and an optional COGS (cost of goods sold) percentage. You instantly see your ROAS, a plain-English rating, the break-even ROAS personalised to your margins, gross profit, net profit, POAS (Profit on Ad Spend), net margin, and the cost to generate each unit of revenue — all computed live in your browser with no data uploaded anywhere.

How it works

The core formula is the simplest in marketing analytics:

ROAS = Ad Revenue ÷ Ad Spend

A £2,000 campaign that drives £8,000 in revenue has a ROAS of 4× (or 400%). The calculation is instantaneous — what takes time is interpreting whether that number is actually good for your business.

Break-even ROAS

To know the minimum ROAS you need to avoid losing money on goods, the calculator applies:

Break-even ROAS = 1 ÷ (1 − COGS%)

With a 40% COGS rate, break-even ROAS = 1 ÷ 0.60 = 1.67×. Your actual ROAS of 4× comfortably clears that bar. With a 75% COGS rate, break-even ROAS shoots to 4×, meaning your “good” 4× ROAS is actually only just covering the cost of goods — with nothing left for ad spend, overheads or profit.

POAS — the complete picture

ROAS uses raw revenue; POAS uses profit:

POAS = (Revenue × (1 − COGS%) − Ad Spend) ÷ Ad Spend

POAS tells you how much profit you made per pound spent on ads, after deducting the cost of goods. A POAS of 1× means you doubled your investment in pure profit terms — very different from a ROAS of 1×, which means you only got your ad spend back.

Worked example

Suppose you run a Google Shopping campaign:

Input	Value
Ad Spend	£2,000
Ad Revenue	£8,000
COGS	40%

Calculations:

ROAS = £8,000 ÷ £2,000 = 4.00× (Healthy)
Break-even ROAS = 1 ÷ (1 − 0.40) = 1.67× — your 4× clears this comfortably
Gross profit = £8,000 × 0.60 = £4,800
Net profit = £4,800 − £2,000 = £2,800
POAS = £2,800 ÷ £2,000 = 1.40× (for every £1 in ad spend you pocket £1.40 profit)
Net margin = £2,800 ÷ £8,000 = 35%

Now change the COGS to 70% — same ROAS of 4×, but gross profit drops to £2,400, net profit to £400, POAS to just 0.20×, and net margin to 5%. A ROAS target that looks healthy can hide a barely-profitable campaign if margins are squeezed.

Formula reference

Metric	Formula
ROAS	Revenue ÷ Ad Spend
Break-even ROAS	1 ÷ (1 − COGS%)
Gross Profit	Revenue × (1 − COGS%)
Net Profit	Gross Profit − Ad Spend
POAS	Net Profit ÷ Ad Spend
Net Margin	Net Profit ÷ Revenue
Cost per Revenue Unit	Ad Spend ÷ Revenue

Everything runs entirely in your browser — no figures are transmitted or stored.