How it’s calculated
Three ratios, four numbers.
- ROAS = Ad revenue ÷ Ad spend
- CPA = Ad spend ÷ Sales
- CPL = Ad spend ÷ Leads
- Break-even ROAS = 1 ÷ Gross margin
- Gross profit = Revenue × Margin − Ad spend
ROAS (return on ad spend) is the revenue from ads divided by the ad spend: a 4x ROAS means 4 in revenue for every 1 spent. CPA is the cost per sale and CPL the cost per lead; enter your gross margin to also see the break-even ROAS, where the ads pay for themselves.
ROAS alone does not show profit: a 3x ROAS is a loss for a business on a 25% margin and a profit on a 50% margin. Enter your margin and compare with the break-even ROAS.
Where sales start with a lead (clinics, B2B, education), read CPL together with the lead-to-sale rate instead of ROAS: a cheap lead that never buys is expensive.
The result is only as right as your measurement. If revenue or conversions are counted twice, or offline sales are not tied back to the ads, ROAS looks different from reality.
Limits
- It is one period's average; calculate campaigns, products or channels separately.
- The attribution model (last click, data-driven) changes the revenue credited to ads, and so the ROAS.
- If the gross margin leaves out variable costs such as shipping, returns and fees, the break-even ROAS is optimistic.
Frequently asked questions
What is a good ROAS?
Copy linkThere is no single right number; a good ROAS is one above your break-even ROAS. Break-even ROAS is 1 ÷ gross margin: on a 40% margin, anything above 2.5x pays for itself.
What is the difference between ROAS and ROI?
Copy linkROAS divides revenue by ad spend and ignores costs. ROI divides profit by the investment. To see profitability use our ROI calculator, or the gross profit line here.
What is the difference between CPA and CPL?
Copy linkCPA is the cost of a sale (or the target conversion); CPL is the cost of an enquiry (a lead). Where sales start with a lead, CPA is the CPL divided by the lead-to-sale rate.
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