Should I include COGS when calculating ROAS?

Classic ROAS does not include cost of goods sold (COGS); it uses revenue only. However, many performance marketers track both ROAS and POAS (Profit on Ad Spend). This calculator lets you include COGS to estimate profit and POAS alongside standard ROAS.

How often should I calculate ROAS?

Most teams review ROAS at least weekly by channel and campaign. For high-spend accounts, daily monitoring helps catch issues early. Always look at ROAS over a long enough window to account for conversion delays, especially for products with longer consideration cycles.

ROAS Calculator (Return on Ad Spend)

Q: What is a good ROAS?

A good ROAS depends on your margins and business model. Many ecommerce brands aim for at least 3:1 (300%) on prospecting campaigns and can accept lower ROAS on remarketing or retention campaigns. The higher your gross margin, the lower the ROAS you can profitably sustain.

Q: How is ROAS different from ROI?

ROAS looks only at revenue generated divided by ad spend. It does not subtract other costs like product cost, salaries, or overhead. ROI is profit divided by total investment and is therefore stricter. A campaign can have a high ROAS but low or negative ROI if non-ad costs are high.

Q: What is Target ROAS in Google Ads?

Target ROAS is a smart bidding strategy where you tell Google Ads the ROAS you want to achieve (for example 400%). Google then automatically adjusts bids in auctions to try to hit that target while maximizing conversion value.

Measure the true performance of your ad campaigns. Calculate ROAS by channel, factor in cost of goods (COGS), and compare scenarios against your target ROAS.

ROAS = Revenue from ads ÷ Ad spend. This tool also estimates profit and POAS (Profit on Ad Spend).

ROAS Calculator

Currency

Target ROAS (%)

Gross margin (%) optional

Channel / Campaign	Ad spend	Revenue	COGS	ROAS	Profit	POAS	Target	Remove
Total	$0.00	$0.00	$0.00	–	$0.00	–

Meets target Below target

Overall ROAS

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Enter spend and revenue to see ROAS.

Estimated profit

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Uses COGS or gross margin if provided.

Break-even ROAS

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Minimum ROAS needed to cover product costs (based on gross margin).

What is ROAS (Return on Ad Spend)?

ROAS (Return on Ad Spend) measures how much revenue you generate for every unit of currency you spend on advertising. It is one of the core performance metrics used by performance marketers, ecommerce brands, and agencies.

ROAS formula
\[ \text{ROAS} = \frac{\text{Revenue from ads}}{\text{Ad spend}} \]

Example: If you spend $1,000 on ads and generate $4,000 in revenue attributed to those ads: \[ \text{ROAS} = \frac{4{,}000}{1{,}000} = 4.0 \;(\text{or } 400\%) \]

ROAS vs. ROI vs. POAS

ROAS: Revenue ÷ Ad spend. Ignores all other costs.
ROI: Profit ÷ Total investment. Includes product, salaries, tools, etc.
POAS (Profit on Ad Spend): Profit attributable to ads ÷ Ad spend.

This calculator shows both ROAS and POAS (if you enter COGS or gross margin), so you can see not just how much revenue you generate, but how much profit is left after product costs.

How to use the ROAS calculator

Select your currency so the output matches your reports.
Set a target ROAS (for example 400% for a 4:1 return) based on your goals or bidding strategy (e.g., Google Ads Target ROAS).
Optionally enter gross margin (e.g., 60%). If you leave COGS blank for a row, the calculator will estimate COGS from revenue using this margin.
Add channels or campaigns (e.g., Google Search, Meta Ads, Amazon Ads) and fill in:
- Ad spend for the period
- Revenue attributed to those ads
- COGS (optional, if you know it per channel)
Review the ROAS, profit, and POAS columns. The badge shows whether each row meets your target ROAS.
Use the totals row and summary cards to understand overall performance and your break-even ROAS.

Break-even ROAS and margin

Your break-even ROAS is the minimum ROAS you need to cover your product costs (COGS), assuming no other costs.

Break-even ROAS (based on gross margin)
Let gross margin be $ m $ (for example 60% = 0.60). Then: \[ \text{Break-even ROAS} = \frac{1}{m} \] Example: If your gross margin is 50%: \[ \text{Break-even ROAS} = \frac{1}{0.5} = 2.0 \;(\text{or } 200\%) \]

Any ROAS above this break-even level contributes to covering overhead and profit. If your ROAS is below break-even for a sustained period, the campaign is likely unprofitable.

Interpreting ROAS benchmarks

Benchmarks vary by industry, margin, and funnel stage, but as a rough guide:

1:1 (100%) – You generate as much revenue as you spend. Usually unprofitable.
2:1 (200%) – May be acceptable for high-margin products or aggressive growth phases.
3–4:1 (300–400%) – Common target for many ecommerce prospecting campaigns.
5:1+ (500%+) – Strong ROAS, often seen on branded or remarketing campaigns.

Always compare ROAS to your unit economics (COGS, shipping, returns, payment fees) and customer lifetime value (LTV). A low first-order ROAS can still be acceptable if LTV is high.

Common ROAS mistakes to avoid

Comparing ROAS across channels without aligning attribution windows and models.
Ignoring COGS and margins, leading to “profitable” ROAS that actually lose money.
Optimizing only for ROAS and starving high-LTV acquisition channels of budget.
Judging campaigns too quickly before conversions have time to mature.

ROAS Calculator FAQ

What is a good ROAS?

It depends on your margins and goals. Many ecommerce brands aim for at least 3:1 (300%) on prospecting campaigns and can accept lower ROAS on remarketing or retention campaigns. If your gross margin is low, you’ll need a higher ROAS to stay profitable.

How is ROAS different from ROI?

ROAS only looks at revenue generated divided by ad spend. ROI subtracts all relevant costs (product, salaries, tools, overhead) and then divides profit by total investment. ROAS is a fast performance metric; ROI is a fuller financial metric.

Should I include COGS in ROAS?

Classic ROAS does not include COGS. However, many marketers track both ROAS and POAS (Profit on Ad Spend). In this calculator you can enter COGS or a gross margin to see both revenue-based ROAS and profit-based POAS.

What is Target ROAS in Google Ads?

Target ROAS is an automated bidding strategy where you tell Google Ads the ROAS you want to achieve (for example 400%). Google then adjusts bids in real time to try to reach that target while maximizing conversion value. Your actual ROAS may be above or below the target depending on traffic and data.

How often should I recalculate ROAS?

For active campaigns, weekly ROAS reviews by channel and campaign are a good baseline. High-spend accounts often monitor ROAS daily. Always use a time window that matches your typical conversion lag so you don’t under-estimate performance.