What is ROAS?

What is ROAS? ROAS (return on ad spend) is the revenue your ads brought in divided by what you spent on them. Revenue of 7,500 from 2,500 of spend is a ROAS of 3.0. Whether that is good depends on your margin: it is good only above your break-even ROAS.

Work it out: free ROAS calculator.

What is the ROAS formula?

ROAS is ad revenue divided by ad spend. Meta reports it as purchase ROAS: the purchase value attributed to your ads divided by the amount spent.

ROAS = revenue from ads ÷ ad spend

ROAS is usually written as a multiple (3.0 or 3x) or a ratio (3:1). All three mean 3 in revenue for every 1 spent.

Worked example

These are the example numbers the ROAS calculator uses.

Input Value
Ad spend 2,500
Revenue from ads 7,500

ROAS = 7,500 ÷ 2,500 = 3.0.

What is a good ROAS?

A good ROAS is one above your break-even ROAS. Break-even ROAS is the point where each order earns exactly what its ads cost, and it comes from your own margin, so there is no single good number for every business.

Break-even ROAS = 1 ÷ contribution margin ratio

Take the orders in the example above: 7,500 in revenue from 50 purchases is 150 per order. With 90 in variable costs per order (product, shipping, payment fees), the contribution margin is 60, or 0.40 of the price. Break-even ROAS = 1 ÷ 0.40 = 2.5.

ROAS Against a break-even of 2.5
2.0 Loses money on each order
2.5 Breaks even
3.0 Each order leaves a profit after ads

A brand with a 70 percent margin breaks even at about 1.43, so a ROAS of 2.0 is profitable for it. The same 2.0 loses money for the brand above. That is why published "good ROAS" averages do not transfer between businesses. The Corporate Finance Institute defines the contribution margin ratio used here as revenue minus all variable costs, divided by revenue. See break-even ROAS for the full method.

How is ROAS used for AI and UGC ads?

ROAS is the result metric that most brands use to judge whether a creative is worth more budget. When several AI versions of one script run against each other, compare their ROAS over the same dates, audience and attribution setting.

  • ROAS in Ads Manager uses Meta's attribution, so it rarely matches the store's total revenue.
  • A new ad with few purchases can show a high or low ROAS by chance. Check that both versions have enough orders before you pick one; the A/B test calculator helps.
  • Creative metrics such as hook rate and CTR explain why ROAS moved. ROAS only shows that it did.

ROAS also ignores repeat orders. A brand with strong repeat purchase can accept a first-order ROAS below break-even if lifetime value covers the difference.

FAQ

How do you calculate ROAS?

Divide the revenue from your ads by the ad spend. Revenue of 7,500 from 2,500 of spend gives a ROAS of 3.0, or 3 in revenue for every 1 spent.

What is a good ROAS?

Any ROAS above your break-even ROAS, which is 1 divided by your contribution margin ratio. With a 40 percent margin, break-even ROAS is 2.5, so 3.0 makes money on each order and 2.0 loses money.

Is a ROAS of 2 good?

Only if your contribution margin is above 50 percent, because break-even ROAS at a 50 percent margin is exactly 2. Below that margin, a ROAS of 2 loses money.

What is the difference between ROAS and ROI?

ROAS compares revenue with ad spend only. ROI compares profit, after product, shipping, fees and other costs, with the full amount invested.

Sources

Checked: 12 Oct 2026