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ROAS Calculator: Break-Even ROAS and PPC ROI

Spending a month on ads at a click, with of clicks buying orders at a margin and orders per customer, earns $560 after the ad cost: 28% ROI and $3.20 in sales for every $1 spent.

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How to calculate ROAS and break-even ROAS

ROAS, return on ad spend, is the sales your ads bring in for every $1 you spend on them. Break-even ROAS is the ROAS where gross profit from those sales exactly covers the ads, which is 1 divided by your margin. Enter your monthly ad spend, cost per click, the share of clicks that buy, average order value, gross margin and orders per customer. We show ROAS, break-even ROAS, profit after ads, ROI, cost per customer and the most you can pay per click.

In the example, $2,000 a month at $1.50 a click buys about 1,333 clicks. 3% buy, so you win 40 customers at $50 each. Each orders twice at $80, for $6,400 in sales: a ROAS of 3.2x. With a 40% margin, break-even ROAS is 2.5x, so these ads make money. You keep $2,560 in gross profit, $560 after the ads, a 28% ROI.

Count repeat orders if your customers come back. With only one order each, the same ads return 1.6x, below break-even, and lose $720 a month. You break even at $1.92 a click, or at a 2.34% conversion rate at today's cost per click. The chart shows profit at every cost per click from free to double yours, so you can see how much room you have before a bid increase turns a profit into a loss.

Use the ROAS your own data supports. Ad platforms often credit themselves with sales that would have happened anyway, so platform-reported ROAS tends to run high. Compare total sales against total ad spend in your store data to check it. This calculator works for Google Ads, Microsoft Ads, Meta, Amazon and any other pay-per-click channel. Results are estimates.

Frequently Asked Questions

How do you calculate ROAS?

ROAS = sales from ads ÷ ad spend. If $2,000 of ads brings in $6,400 in sales, ROAS is 3.2, often written 3.2x or 320%. It uses revenue, not profit, so a ROAS above 1 doesn't mean you made money. Compare it with your break-even ROAS.

How do you calculate break-even ROAS?

Break-even ROAS = 1 ÷ gross margin. At a 40% margin, it's 1 ÷ 0.40 = 2.5x. At 25%, it's 4x. At 60%, it's about 1.67x. Below break-even, each sale from ads loses money on the first order. Your margin should cover product cost, shipping and payment fees.

What is a good ROAS?

Any ROAS above your break-even ROAS is profitable. Many ecommerce businesses aim for 3x to 4x, but a store with an 80% margin can profit at 1.5x, and one with a 20% margin needs over 5x. The example's 3.2x against a 2.5x break-even leaves a modest profit.

What is the difference between ROAS and ROI?

ROAS divides sales by ad spend. ROI divides profit after ad spend by ad spend. The example has a 3.2x ROAS but a 28% ROI, because 60% of each sale goes to product costs. ROI tells you whether you made money. ROAS is easier to track in ad platforms.

How do you calculate PPC ROI?

PPC ROI = (gross profit from ad sales − ad spend) ÷ ad spend × 100. In the example: $6,400 in sales × 40% margin is $2,560. Minus $2,000 in ads is $560, divided by $2,000 is 28%.

What is a good ROI for Google Ads?

A positive ROI on gross profit means the ads paid for themselves. Many advertisers target 50% to 100% or more on the first order, and accept less when customers buy again. Track ROI by campaign, since a few profitable campaigns often carry several that lose money.

What is the maximum cost per click I can afford?

Max CPC = conversion rate × order value × orders per customer × margin. In the example: 3% × $80 × 2 × 40% is $1.92. Above that, each click costs more than the profit it brings. Many advertisers bid below this to leave room for profit.

How does conversion rate affect ROAS?

Directly. Double the conversion rate and you double the sales from the same spend. In the example, raising conversion from 3% to 4% lifts ROAS from 3.2x to 4.27x and ROI from 28% to 71%. Landing page speed, clear offers and matching the ad to the page usually move conversion more than bid changes.

Should ROAS include repeat purchases?

If customers come back, yes, because the ads won those customers. The example returns 3.2x with 2 orders per customer and 1.6x with 1. Use repeat orders you can count within 6 to 12 months, from your own data, not a lifetime guess.

Why is my ROAS high but I'm still losing money?

Usually because your margin is thin, so break-even ROAS is higher than you think. At a 20% margin, a 4x ROAS still loses money. Other causes: platform-reported ROAS counting sales you'd have made anyway, returns, and fixed costs such as agency fees left out of ad spend.

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