What is ROAS and how is it calculated?
Return on ad spend is a ratio, usually written as a multiple: $48,000 of attributed revenue on $12,000 of spend is a 4x ROAS. ACOS is the same relationship the other way up — ad spend over revenue — and 4x ROAS is a 25% ACOS.
A break-even ROAS calculator uses 1 ÷ gross margin. At a 55% margin, every dollar of revenue leaves 55 cents to cover the ads, so the campaign has to return about 1.82x before it stops losing money. A target ROAS calculator should use this result as the minimum, not guess a target in isolation.
ROAS counts revenue, not profit, and it counts only what the platform attributes. Two campaigns at the same ROAS are not equally good if one sells a product you make 70% on and the other sells one you make 20% on, which is why gross margin is an input here rather than an afterthought.
