Guide · Updated November 2026 · How we check our numbers

ROAS, Break-Even ROAS and Whether Your Ads Make Money

Return on ad spend (ROAS) tells you how much revenue each advertising dollar brings in. On its own it can be misleading — you need to compare it with your margin.

ROAS

ROAS = Revenue from ads ÷ Ad spend. $12,000 of sales from $3,000 of ads is a 4.0x ROAS.

Break-even ROAS

Break-even ROAS = 1 ÷ Gross margin. With a 40% margin, you need 2.5x just to cover the ad cost. In the example, gross profit is $12,000 × 0.40 = $4,800, so profit after ads is $1,800.

The funnel behind ROAS

• CPM — cost per 1,000 impressions. $500 for 200,000 impressions is a $2.50 CPM.
• CTR — clicks ÷ impressions. 1,500 clicks is 0.75%.
• Conversion rate — sales ÷ visitors. 300 sales from 12,000 visitors is 2.5%.

Improving any step — cheaper impressions, better ads, a better landing page — raises ROAS.

Think in customer lifetime value

If customers buy again, a first-order ROAS below break-even can still pay off. A customer worth $360 in lifetime gross profit justifies a higher acquisition cost than one worth $60.

Try the calculators

This guide is general information, not professional advice.