Calculate your ROAS and the ROAS you need to break even.

How to calculate ROAS

ROAS = revenue from ads ÷ ad spend
ROAS (%) = revenue from ads ÷ ad spend × 100

Take the revenue and the spend from the same campaigns over the same period. If $2,000 of ads brought in $8,000 of sales, the ROAS is 8,000 ÷ 2,000 = 4, written as 4x, 4:1 or 400%. All three mean $4 of revenue for every $1 of ads.

Break-even ROAS by margin

Break-even ROAS = 1 ÷ gross margin: the ROAS at which the profit on your sales just covers the ad spend, before fees.

So a ROAS of 3 is healthy for a business with 50% margins and loses money for one with 20%. Our guide to what a good ROAS is explains how to set yours.

How to set a target ROAS

Target ROAS = 1 ÷ (gross margin − share of revenue you want to keep as profit)

With a 40% margin and a goal of keeping 10% of revenue as profit, the target is 1 ÷ (0.40 − 0.10) = 3.3. Google Ads takes a Target ROAS as a percentage, so you would enter about 333%. Leave room for fees, which come out of the same profit.

ROAS vs ROI: why a good ROAS can still lose money

ROI (%) = (revenue × gross margin − ad spend − fees) ÷ (ad spend + fees) × 100
Highest cost per lead that breaks even = customer value × close rate × gross margin

ROAS counts revenue; ROI counts what you keep. Take the same fictional $8,000 of sales from $2,000 of ads, a ROAS of 4. At a 40% margin the sales leave $3,200 of gross profit, so the ads make $1,200 and the ROI is 60%. At a 20% margin they leave $1,600, and the same ROAS of 4 loses $400.

How to estimate ROAS before you have sales data

The From clicks mode works forward from what you know: ad spend ÷ cost per click gives clicks, then your lead rate, close rate and customer value give revenue. With its example numbers, $3,000 at $4 a click buys 750 clicks; at a 5% lead rate and a 20% close rate that averages 7.5 customers a month, worth $11,250 at $1,500 each: a ROAS of 3.75.

Where to find ROAS in Google Ads and Meta

• Google Ads: add the Conv. value / cost column. It is your ROAS when conversions carry values, such as purchase amounts.
• Google Ads: Cost, Clicks and Avg. CPC give spend, clicks and cost per click. Check that Conversions count real leads or sales, not page views or button clicks.
• Meta Ads Manager: add the Purchase ROAS column, the purchase value Meta links to your ads divided by the amount spent.
• Your close rate, customer value and margin come from your own sales records and accounts, not from the platforms.

Why platform ROAS differs from your accounts

• Attribution: the platform counts conversions it can link to an ad, under its own rules and time windows.
• Fees: management fees and tools aren't in platform figures.
• Refunds and cancellations: a counted conversion may never become revenue.
• Duplicates: the same lead can be counted twice if tracking fires twice.
• Margin: ROAS uses revenue, not profit.

How to improve ROAS

• Fix conversion tracking first, so the account optimizes for real sales and leads.
• Add negative keywords for searches that never buy.
• Send clicks to a page built for the search or the ad, with one clear next step.
• Set bid targets from your break-even and target ROAS, not from a generic benchmark.
• Feed lead quality and sales back into the account, so it learns which clicks become customers.

Google Ads management, Meta Ads management and conversion optimization are how we do this for clients. To plan spend from a lead goal, use the Google Ads Budget Calculator.