ROAS Calculator

ROAS vs. ROI: the difference in one minute

ROAS (return on advertising spend) is calculated as revenue divided by ad spend: 4,000 € in revenue from a 1,000 € ad budget gives a ROAS of 4.0, or 400%. Whether that figure is good depends solely on your contribution margin, which is why this calculator also shows break-even ROAS, ad profit and POAS.

ROAS is purely revenue-based and knows no costs other than the ad spend itself. ROI, by contrast, measures the actual profit relative to costs. That can be deceptive: an impressive ROAS of 3.0 can still be a loss-making business at a low margin, because the cost of goods or services eats up the apparent success. Anyone who sets their budget by ROAS alone, without factoring in the margin, is flying blind.

Why break-even ROAS matters more than ROAS

Break-even ROAS is the value at which a campaign starts to cover its costs at all. It is calculated as 1 divided by your contribution margin. At a 30% margin, break-even ROAS is 3.33: only above this value does the campaign make money; below it, you lose money on every sale.

Without this margin context, ROAS is practically worthless as a steering metric: of two companies with an identical ROAS of 4.0, one can be profitable and the other loss-making, depending on how high their respective margins are.

POAS: profit instead of revenue per advertising euro

POAS stands for profit on ad spend and builds the margin in directly: POAS = (revenue × margin) divided by ad spend. A POAS above 1.0 means that the campaign is actually profitable after deducting the cost of goods or services, not merely strong on revenue.

Because POAS already includes the margin, it is considered a more honest steering metric than ROAS alone. It directly answers the question that really counts: is there any profit left at the end?

What is a good ROAS? An honest look across industries

There is no universally good ROAS; what matters is your own margin. Retail and e-commerce with thin margins tend to need high ROAS values to stay profitable, while service providers and software vendors with high contribution margins already make a profit at considerably lower ROAS values.

When acquiring new customers, ROAS may temporarily fall below break-even if customer lifetime value (LTV) is calculated across several orders; a single first purchase does not necessarily have to cover the advertising costs straight away. If your ROAS stays below break-even permanently, it is worth reviewing your campaign structure and audience targeting as part of a performance marketing consultation.