The ROAS formula
ROAS, or return on ad spend, is the revenue your ads bring in divided by what the ads cost. It tells you how much revenue each unit of ad spend is associated with, not how much profit it leaves.
ROAS = revenue from ads ÷ ad spend
For example, $5,000 of revenue from $1,000 of ad spend gives $5,000 ÷ $1,000 = 5.0x. For every $1 of ad spend, the ads brought in $5 of revenue.
ROAS as a multiple or a percentage
The same ROAS can be written two ways. 5.0x means $5 of revenue for every $1 of ad spend; as a percentage, it is 500%. Multiply the multiple by 100 to get the percentage, and divide by 100 to go back.
Google Ads asks for target ROAS as a percentage, so a goal of 4.0x is entered as 400%. Before you compare two reports, check which form each one uses.
Store revenue or ad platform revenue?
For one campaign, use the revenue the ad platform attributes to it, such as the purchase conversion value in Meta Ads Manager or the conversion value in Google Ads. That is the campaign’s ROAS as that platform sees it.
For the whole store, divide your total store revenue by your total ad spend across all networks. This blended ROAS, also called MER (marketing efficiency ratio), counts each order once, even when several networks claim it.
On a Shopify store, store revenue comes from your Shopify orders, and ad platform revenue comes from each network’s own report. The two often differ: why ad platform conversion counts differ shows how to compare them fairly.
ROAS in Meta Ads and Google Ads
Each ad network reports the revenue it attributes to its own ads, under its own attribution settings. If a customer clicks a Meta ad, later clicks a Google ad and then places one order, both networks can count that purchase. Adding up the ROAS each network reports can therefore overstate what your ads earned together.
To compare networks fairly, use the same date range, currency and purchase definition in each report, and check the store orders behind the numbers.
ROAS vs ROI vs POAS
ROAS compares revenue with ad spend. POAS compares profit before ad spend with ad spend; WeProfit uses this POAS formula, and net profit subtracts ad spend afterward. ROI compares profit with what you invested, and its definition varies. For ads, it is often profit after ad spend divided by ad spend.
| Ratio | Formula | Example |
|---|---|---|
| ROAS | Revenue ÷ ad spend | $5,000 ÷ $1,000 = 5.0x |
| POAS | Profit before ad spend ÷ ad spend | $2,200 ÷ $1,000 = 2.2x |
| ROI on ad spend | Profit after ad spend ÷ ad spend | $1,200 ÷ $1,000 = 120% |
The example keeps a 44% margin before ad spend. With these formulas, ROI on ad spend is POAS minus 1, so a POAS of 2.2x is a 120% return after the ad cost.
Why the same ROAS can mean profit or loss
A campaign can generate strong revenue while selling products with thin margins or high fulfillment costs. Take two campaigns with $5,000 of revenue from $1,000 of ad spend: both show a ROAS of 5.0x.
The first keeps a 44% margin before ad spend, so $2,200 remains before ads and $1,200 after them. The second keeps 10%: $500 before ads, and a loss of $500 once the ads are paid. Its POAS is 0.5x.
The ROAS vs POAS guide shows every cost behind these two campaigns. To find the ROAS a product needs, use the break-even ROAS calculator.
What a good ROAS depends on
A good ROAS is one above your break-even ROAS. Because that point depends on your costs, the same number can be a profit for one store and a loss for another:
- Margin. At a 50% margin before ad spend, 2.0x breaks even; at 20%, you need 5.0x.
- Costs per order. Shipping, payment fees and refunds take a share of every order, so they raise the ROAS you need.
- Attribution. The revenue in a ROAS depends on how the platform credits orders, so compare like with like.
- Repeat customers. If customers buy again, a first order near break-even can still be worth it. The ROAS of the first order does not show that.
Track ROAS with the costs behind it
WeProfit captures your store events and sends conversion data back to the networks you advertise on. It puts ad spend, product costs, refunds, fees and shipping next to revenue, and its POAS compares profit before advertising costs with ad spend.
Automated ad spend sync covers Meta, Google Ads, TikTok and Pinterest. See WeProfit profit analytics or compare plans and pricing. You can try WeProfit free for 14 days.
ROAS questions
What is a good ROAS?
One above your break-even ROAS. A 4.0x ROAS is a loss at a 20% margin before ad spend and a profit at 50%, so no single number fits every store. Work out your own floor with the break-even ROAS calculator.
What is ACOS, and how does it relate to ROAS?
ACOS, or advertising cost of sales, is ad spend divided by revenue, shown as a percentage. It is the inverse of ROAS: a ROAS of 5.0x is an ACOS of 20%, and a 25% ACOS is a 4.0x ROAS. ACOS is common in Amazon advertising.
Which revenue should I use to calculate ROAS?
The revenue that matches your question. For one campaign, take the revenue its ad platform attributes to it. For the whole store, divide total store revenue by total ad spend. Keep the date range, currency and refund handling the same on both sides.
How do I calculate ROAS as a percentage?
Divide revenue by ad spend and multiply by 100. $5,000 of revenue from $1,000 of ad spend is a ROAS of 5.0x, or 500%.
Is ROAS the same as ROI?
No. ROAS uses revenue, while ROI uses profit. A campaign can show a high ROAS and still lose money once product costs, shipping, payment fees and refunds are paid.