Alp SuleimanGrowth Partner

ROAS Calculator

The ROAS your ad platform shows says little on its own. Add your margin, VAT and variable costs like shipping and fees to see whether ads make or lose money, and which ROAS you must not drop below.

Tool 10 / 15

ROAS Calculator

Inputs

Ads

Currency

$
$

The purchase value your ad dashboard reports.

Does revenue include VAT?

%

Enter the rate that applies to what you sell.

Orders or conversions from ads. Needed for max CPA; leave 0 if unknown.

Margin and costs

How will you enter product cost?

%

What's left of the price excluding VAT after product cost.

%

Shipping, payment fees, marketplace commission, returns and packaging, as a share of revenue excluding VAT.

%

How much of revenue should remain once ads are paid?

Result

ROAS: 4.8×

ROAS

4.8×

Also written as 480%; on VAT-inclusive revenue.

Your ads are profitable

Your ROAS (4.8×) is 20% above break-even (4×). After ad spend, $2,000 of contribution remains. Expect ROAS to drift toward the bar as you raise spend.

Break-even ROAS

4×

Contribution margin 30%; on VAT-inclusive revenue. Below this you lose money.

POAS

1.2×

Contribution returned per 1 of ad spend. Above 1× is profit.

Net contribution after ads

$2,000

5% of revenue excluding VAT. Fixed costs are paid from this.

ROAS needed for target margin

6×

For a 10% margin after ads; on VAT-inclusive revenue.

Max CPA

$30

Current CPA $25; average order $120.

Target-margin CPA

$20

Bid ceiling per order that protects a 10% margin.

Where does revenue go? (excl. VAT)

  • Revenue excl. VAT$40,000
  • Product cost-$22,000
  • Shipping, fees and other variable costs-$6,000
  • Ad spend-$10,000
  • What you keep$2,000

Share this result

Results are estimates based on the values you enter, not investment or financial advice. The calculation runs in your browser and no separate request is made to send your numbers. The values you enter are written into the link in the address bar.

Formula

  • ROAS

    Revenue from ads ÷ Ad spend

  • Break-even ROAS

    1 ÷ Contribution margin

    Contribution margin = Gross margin − Other variable costs (on revenue excluding VAT). If revenue is reported including VAT, the result is multiplied by (1 + VAT rate).

  • POAS

    Contribution before ads ÷ Ad spend

    Above 1 means ads pay for themselves in profit.

  • Max CPA

    Contribution before ads ÷ Orders

How to read the result

Compare ROAS with your break-even ROAS, not with an industry average. The same 4× ROAS can be healthy profit for a 60%-margin digital product and a clear loss for a 25%-margin electronics store. Your contribution margin sets the bar.

Make sure both sides use the same basis. Ad platforms usually report the purchase value your pixel sends, which often includes VAT or sales tax. That tax isn't yours to keep, so the tool converts break-even ROAS to whatever basis you report in. You compare like with like.

Put costs that grow with every sale — shipping, payment fees, marketplace commission, returns, packaging — into 'other variable costs'. In e-commerce they eat a large share of the margin; leave them out and ads look profitable while the books go red.

Max CPA is the most you can pay to win an order without losing money. Campaign targets and bid caps belong below it. Target-margin CPA is the ceiling that still leaves the profit you want while growing. If your model loses money on the first order and earns it back through repeat purchases, make this call on customer lifetime value, not the first order.

If ROAS sits below break-even, you have three levers: raise conversion rate and order value (revenue), cut variable costs (the bar), or pause unprofitable campaigns and products (spend). Before raising budgets, make sure ROAS clears the bar comfortably; ROAS usually falls as spend scales.

Frequently asked questions

What is a good ROAS?

There is no single right ROAS. The minimum is your break-even ROAS: 1 ÷ contribution margin. With a 30% contribution margin, anything below 3.33× loses money. Profitable growth needs a ROAS above that, one that protects your target margin — the tool calculates that too.

How do you calculate break-even ROAS?

First find what each sale leaves before ads: gross margin minus variable costs such as shipping and fees. Break-even ROAS is the inverse of that ratio. With a 45% gross margin and 15% variable costs, contribution is 30% and break-even ROAS is 1 ÷ 0.30 = 3.33×. If you track revenue including VAT, scale it up by the VAT rate.

What is the difference between ROAS and POAS?

ROAS measures revenue per unit of ad spend; POAS measures profit (here, contribution before ads). A POAS above 1 means ads pay for themselves in profit. When one campaign sells products with very different margins, POAS is the better guide.

Should ROAS include VAT?

Profit should be calculated on revenue excluding VAT, because the tax isn't yours. If your ad dashboard reports VAT-inclusive values, that's fine — just compare VAT-inclusive ROAS with a VAT-inclusive break-even ROAS. The tool puts both on the same basis.

Why is my ROAS high but the business isn't profitable?

Three common reasons: the break-even bar is higher than assumed (shipping, fees and returns were left out), the platform over-credits itself (counting orders that would have happened anyway), or fixed costs outside advertising consume the contribution. This tool fixes the first; attribution needs controlled tests and fixed costs need a break-even analysis.

Let's read the story behind the numbers together.

Let's pin down which metric is really limiting your growth and which lever to pull first.

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