Return on Ad Spend Calculator Formula

Understand the math behind the return on ad spend calculator. Each variable explained with a worked example.

Use the Return on Ad Spend Calculator

Formulas Used

ROAS

roas = ad_spend > 0 ? revenue_from_ads / ad_spend : 0

ROAS Percentage

roas_pct = ad_spend > 0 ? (revenue_from_ads / ad_spend) * 100 : 0

Net Revenue After Ad Spend

net_revenue = revenue_from_ads - ad_spend

Variables

VariableDescriptionDefault
revenue_from_adsRevenue from Ads(USD)50000
ad_spendTotal Ad Spend(USD)10000

How It Works

How to Calculate Return on Ad Spend

Formula

ROAS = Revenue from Ads / Ad Spend

ROAS measures how effectively your advertising budget translates into revenue. A ROAS of 4.0 means every dollar of ad spend generates $4 in revenue. Unlike ROI, ROAS focuses solely on gross revenue and does not subtract product costs or overhead, so a profitable campaign typically needs a ROAS well above 1.0 to cover those expenses.

Worked Example

An advertising campaign generated $50,000 in revenue from $10,000 in ad spend.

revenue_from_ads = 50000ad_spend = 10000
  1. 01ROAS = $50,000 / $10,000 = 5.0
  2. 02ROAS % = 5.0 x 100 = 500%
  3. 03Net Revenue = $50,000 - $10,000 = $40,000

Frequently Asked Questions

What ROAS should I target?

It depends on your margins. With 50% gross margins, you need at least 2.0 ROAS to break even on ad spend. Most businesses target 3-5x ROAS. Higher-margin products can profit at lower ROAS values.

How is ROAS different from ROI?

ROAS measures gross revenue per ad dollar and is specific to advertising. ROI measures net profit relative to total investment, factoring in all costs. ROAS is simpler but less complete.

Learn More

Guide

Marketing ROI Guide

Learn how to calculate and improve marketing ROI. Covers ROAS, cost per acquisition, cost per lead, attribution models, and channel-level performance analysis.

Ready to run the numbers?

Open Return on Ad Spend Calculator