ROAS (return on ad spend) is revenue from ads divided by what the ads cost. On its own it does not tell you whether you made money: that depends on your margin. This calculator shows your ROAS, the break-even ROAS for your gross margin (1 divided by the margin), the ROAS you need to hit a profit target, and, on the lifetime value tab, how much you can pay to win a customer who buys more than once. Everything runs in your browser. Nothing you type is sent to We.Inc or anyone else.
A shop spends $2,000 on ads in a month and the ads bring $7,000 of revenue. ROAS is 7,000 / 2,000 = 3.5.
Its gross margin is 40%, so break-even ROAS is 2.5. Gross profit on that revenue is $2,800; after the $2,000 ad spend, $800 is left. The ads are profitable, but thinly.
To keep 10% of revenue as profit after ads, it needs a ROAS of 1 / (0.40 - 0.10) = 3.33. At 3.5 it clears that target.
Customers spend $70 per order and buy 2.5 times on average, so lifetime gross profit is $70 x 2.5 x 0.40 = $70. That is the break-even CAC. If each new customer costs $35 in ads, the LTV-based ROAS is (70 x 2.5) / 35 = 5.
Two shops with the same 3x ROAS can have opposite results. One with a 60% margin keeps 80 cents of profit per ad dollar; one with a 25% margin loses 25 cents. That is why this calculator always shows break-even ROAS next to your actual ROAS.
Raising margin (better prices, cheaper shipping, fewer returns) lowers the ROAS you need, which often does more than squeezing ad costs.
Ad spend is wasted when the page it sends people to is slow or unclear. A focused landing page with one offer and one action usually converts better than a busy home page. We.Inc can build that page; the brief at the bottom carries your numbers so the page states the offer plainly.
ROAS = revenue attributed to ads / ad spend. $5,000 revenue from $1,000 spend is a ROAS of 5, often written 5x or 500%.
Break-even ROAS = 1 / gross margin. With a 40% margin, break-even ROAS is 1 / 0.4 = 2.5: every $1 of ads must bring $2.50 of revenue just to cover product costs and the ad itself.
There is no single good number. A ROAS is good when it is above your break-even ROAS by enough to leave the profit you want. A 3x ROAS is profitable at a 50% margin and loses money at a 25% margin.
If you want profit after ads to be a share p of revenue, target ROAS = 1 / (margin - p). With a 40% margin and a 10% profit goal, target ROAS = 1 / 0.30 = 3.33. The goal must be below the margin, or no ROAS can reach it.
ROAS compares revenue with ad spend only. ROI compares profit with the whole investment. Use the ROI calculator when you want to include other costs.
It is the most you can spend to acquire a customer and still break even over their lifetime: average order value x orders per customer x gross margin.
Related: ROI Calculator, CPM Calculator, Profit Margin Calculator, Break-Even Calculator, Landing page templates, Pricing.
Turn this result into your website or see the We.Inc website builder. The free plan gives you up to 3 template sites on a we.inc address, with no AI credits and no custom domain. Paid plans are Starter at $20 a month, Pro at $50 and Max at $99. See pricing.
We.Inc is an AI-powered website builder you can resell under your own brand. Launch a branded client dashboard, bill on Stripe Connect, and deliver AI-generated websites in minutes. White-label plans start at $99 a month for 25 client sites, with a 7-day free trial and no per-site fees.