Ad Spend ROI Calculator — ROAS & Profit

Frequently Asked Questions

What is ROAS and how is it different from ROI?

ROAS (Return on Ad Spend) is total revenue divided by ad spend. A ROAS of 3× means you generated $3 in revenue for every $1 spent on ads. ROI accounts for your costs — it's net profit divided by ad spend. A 3× ROAS is only profitable if your gross margin is above 33%; the break-even ROAS equals 1 divided by your margin.

What is a good ROAS?

It depends entirely on your gross margin. If your margin is 50%, you need at least a 2× ROAS to break even — any higher is profitable. If your margin is 30%, you need at least a 3.3× ROAS. There's no universal 'good' ROAS number; what matters is whether ROAS × margin > 1.

What is CAC and why does it matter?

CAC (Customer Acquisition Cost) is the total ad spend divided by the number of conversions. It tells you what you paid to acquire each customer. To evaluate CAC, compare it to your Customer Lifetime Value (LTV). An LTV:CAC ratio above 3:1 is typically considered healthy for SaaS and subscription businesses.

How do I improve ad profitability?

Three levers: lower CPC (better targeting, Quality Score, bid strategy), raise conversion rate (landing page optimization, offer clarity), or increase AOV (bundles, upsells, minimum order thresholds). Improving any one of them improves profitability — improving all three compounds dramatically.

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