Return on Ad Spend

Free Return on Ad Spend calculator with clear step-by-step results.

About Return on Ad Spend

Reports three versions of the same campaign. Headline ROAS is revenue over spend and ignores margin entirely. Profit on ad spend applies gross margin and is the figure that determines whether the campaign made money. Lifetime-adjusted ROAS credits new customers with their expected repeat revenue.

Formulas

Return on ad spend

ROAS = attributed revenue / ad spend

Profit on ad spend

POAS = attributed revenue x gross margin / ad spend

Worked example

With the default values below, Return on Ad Spend returns Return on ad spend of 4.50. Change any input above and every figure here is recalculated in your browser.

Inputs used

Advertising spendminimum 0 $: 6,000 $
Attributed revenueminimum 0 $: 27,000 $
Gross marginaccepts 0–100 %: 46 %
Share of revenue from new customersaccepts 0–100 %: 60 %
Lifetime revenue multiple for new customersaccepts 1–15 x: 2.2 x

Results

Return on ad spend: 4.50 x
Profit on ad spend: 2.07 x
Lifetime-adjusted ROAS: 7.74 x
Gross profit after ad spend: $6,420.00

Step by step

1Values used
2Return on ad spend
3Profit on ad spend
4Return on ad spend= 4.50 x
5Profit on ad spend= 2.07 x
6Lifetime-adjusted ROAS= 7.74 x
7Gross profit after ad spend= $6,420.00

Assumptions and limits

The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why is POAS more useful than ROAS?

A 4x ROAS on 20% margins loses money once you count anything beyond cost of goods, while 2x on 70% margins is comfortably profitable. ROAS alone cannot distinguish them.

Is the lifetime multiple safe to rely on?

Only if it comes from cohort data. Applying an optimistic multiple to justify current spend is the most common way advertising budgets outrun their returns.