# ROAS calculator: is your advertising making money?

> Work out ROAS, break-even ROAS and the most you can pay for an order, from your own margin, with delivery, cash-on-delivery refusals and returns counted in.

## How we work it out

A ROAS of 4 can lose money at a 20% margin. That is why we work out break-even from your margin, not from a "good ROAS" for your industry. From the revenue we take off refused and returned parcels, then the goods and the fees. We subtract delivery on every parcel sent and return postage on every parcel that comes back. What is left pays for the ads: break-even is the ROAS at which it equals the ad spend.

## What people ask

### How is ROAS calculated?

ROAS is the revenue from the ads divided by what they cost. 4,000 of revenue from 1,000 of spend is a ROAS of 4. It tells you how much turnover the ads bring, not whether they make money: for that you need the margin, delivery and fees.

### What is a good ROAS?

A good ROAS is one above your break-even. Break-even is the revenue divided by what is left of it after goods, delivery, fees and returns. At a 50% margin and no other costs it is 2; at a 20% margin it is 5. That is why a "good ROAS for your industry" says nothing about your store.

### What is break-even ROAS?

It is the ROAS at which the advertising breaks even: everything left from the orders after goods, delivery, fees and returns goes on the ads. Above it the ads make money; below it they lose. The calculator works it out from your margin.

### Why does cash on delivery change the numbers?

Because a refused parcel is paid for twice, once to the customer and once back, and brings no revenue. If 10% of parcels come back, every paid order also carries their delivery. The ad account counts the order, not the refusal, so the ROAS it shows looks better than it is.

### What is the difference between ROAS and ROI?

ROAS compares revenue with ad spend. ROI compares profit with the whole investment. A ROAS of 3 can be a loss if the margin is thin; an ROI above zero is always a profit. That is why the calculator shows both sides: ROAS, and how much you make or lose on every 100 of advertising.

Page: https://tnb-tech.com/en/roas-calculator/