SuanSupplyWhat does ROAS mean?
ROAS stands for return on ad spend. It tells you how many dollars of sales you get back for every dollar you put into ads. Amazon Sponsored Products, Etsy Ads, Google Ads, Meta (Facebook and Instagram) and TikTok all report it, sometimes under the name "conversion value / cost".
How do you calculate ROAS?
Divide the revenue from your ads by what you spent on those ads:
If you spent $420 on ads and they brought in $1,650 in sales, your ROAS is 1,650 ÷ 420 = 3.93. You'll see the same result written as 3.93x, 3.93:1 or 393%. (Example numbers, the same as the calculator's defaults.)
What is break-even ROAS?
ROAS only tells you about revenue, not profit. To know whether an ad makes money, compare it with your break-even ROAS: the point where ad sales just cover the product, the fees and the ads.
Profit margin before ads is (selling price − product cost − fees) ÷ selling price. In the example, ($24.99 − $6.04 − $9.25) ÷ $24.99 = 38.8%, so break-even ROAS is 1 ÷ 0.388 = 2.58. The example ROAS of 3.93 is above it, so those ads made money: about $220 profit on $1,650 of ad sales after the $420 ad spend.
What is a good ROAS?
A good ROAS is one above your break-even ROAS, with room for the profit you want. There isn't one number that suits every business, because it depends on your margin:
| Profit margin before ads | Break-even ROAS | Same as ACoS |
|---|---|---|
| 20% | 5.00 | 20% |
| 25% | 4.00 | 25% |
| 33.3% | 3.00 | 33.3% |
| 40% | 2.50 | 40% |
| 50% | 2.00 | 50% |
To keep a profit after ads, aim for a target ROAS = 1 ÷ (margin before ads − the margin you want to keep). With a 38.8% margin and a 10% profit goal, that's 1 ÷ 0.288 = a target ROAS of about 3.47.
ROAS vs ACoS: what's the difference?
They are the same measurement flipped over. ACoS (advertising cost of sales), which Amazon uses, is ad spend ÷ ad sales. ROAS is ad sales ÷ ad spend. So ROAS = 1 ÷ ACoS: an ACoS of 25% is a ROAS of 4. Amazon sellers can use our ACoS calculator for TACoS and bid limits, and our guide to what a good ACoS is.
How can you improve ROAS?
- Cut search terms and audiences that spend but don't sell. Add them as negatives.
- Lower bids where ROAS is under break-even, and raise them where it is well above target.
- Raise conversion rate with better photos, titles, reviews and price. More orders per click lifts ROAS without spending more.
- Lower your costs. A better landed cost raises your margin, which lowers your break-even ROAS. Check yours with the landed cost calculator.
- Judge ROAS over a few weeks, not a few days: attribution windows mean some sales show up later.
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Frequently asked questions
What does ROAS mean?
ROAS means return on ad spend. It is the revenue your ads brought in divided by what you spent on those ads. A ROAS of 4 means every $1 of ad spend brought in $4 of sales.
How do I calculate ROAS?
Divide ad revenue by ad spend. For example, $1,650 in ad sales from $420 in ad spend is a ROAS of 3.93, often written 3.93x or 393%.
What is break-even ROAS?
Break-even ROAS is the ROAS where ad-driven sales exactly cover the ad spend and your product costs. It equals 1 divided by your profit margin before ads. With a 38.8% margin, break-even ROAS is about 2.58.
What is a good ROAS?
Any ROAS above your break-even ROAS makes money on ad-driven sales. There is no single good number for every business, because it depends on your margin: a product with a 25% margin needs a ROAS of 4 just to break even.
Is ROAS the same as ACoS?
They measure the same thing from opposite sides. ACoS is ad spend divided by ad sales, and ROAS is ad sales divided by ad spend, so ROAS = 1 / ACoS. An ACoS of 25% equals a ROAS of 4.
Is ROAS a percentage or a ratio?
Both are used. A ROAS of 3.5 can be written as 3.5, 3.5x, 3.5:1 or 350%. They all mean $3.50 of sales for every $1 spent on ads.
This calculator gives estimates for planning. Ad platforms count sales differently (attribution windows, view-through sales), so check your platform's reports before making decisions.