---
title: "ROAS vs ROI: the difference, with example | Product Metrics"
description: "ROAS is revenue per euro of ad spend; ROI is profit after costs relative to that spend. See why a ROAS above 1 can still lose money, with a worked example."
canonical: "https://www.productmetrics.io/glossary/roas-vs-roi"
pageType: article
language: en
publisher: "Product Metrics"
author: "Berend Vrakking"
datePublished: 2026-10-07
dateModified: 2026-10-07
---

> Content index: https://www.productmetrics.io/llms.txt

# ROAS vs ROI

ROAS divides the revenue from ads by ad spend, while ROI divides the profit left after costs and ad spend by that spend, so only ROI counts margin.

## Formula

`ROAS = revenue from ads ÷ ad spend · ROI = (profit before ad spend − ad spend) ÷ ad spend`

Profit before ad spend is revenue minus all variable costs: product cost, shipping, fees and returns. Divided by ad spend, that profit is POAS, so ROI = POAS − 1 = ROAS × contribution margin − 1. Break-even ROAS is 1 ÷ contribution margin; break-even POAS is 1 and break-even ROI is 0%.

## Example

One product, the same spend, three metrics:

| Step | Value |
| --- | --- |
| Ad spend | €1,000.00 |
| Revenue from ads | €3,000.00 |
| Contribution margin | 30% |
| Profit before ad spend (€3,000.00 × 30%) | €900.00 |
| ROAS (€3,000.00 ÷ €1,000.00) | 3 |
| POAS (€900.00 ÷ €1,000.00) | 0.9 |
| ROI ((€900.00 − €1,000.00) ÷ €1,000.00) | −10% |
| Break-even ROAS (1 ÷ 0.30) | 3.33 |

A ROAS of 3 looks healthy, but the product needs 3.33 to break even: the ads lost €100.00, a POAS of 0.9 and an ROI of −10%. Illustrative data.

## For one product, and for an account

Contribution margin is the whole gap between the two. At the same ROAS of 3, a product with a 30% margin has an ROI of −10% and a product with a 50% margin an ROI of 50%. On an account ROAS report they look identical.

Use ROAS where Google Ads expects it: a target ROAS is the conversion value you want per unit of ad spend, so with revenue as conversion value the setting works in ROAS. Use ROI or POAS for business decisions, such as whether to increase or lower a product’s priority. Product Metrics starts in ROAS and moves to POAS as soon as margins are connected.

## Common mistake

Reading any ROAS above 1 as profit. ROAS only covers the ad spend; the product cost, shipping, fees and returns still come out of the revenue.

## Questions

### Is ROAS the same as ROI?

No. ROAS divides revenue by ad spend and leaves out what the products cost. ROI divides the profit after all costs, including the ad spend, by that spend. They only move together when margins stay the same.

### Can a ROAS above 1 still lose money?

Yes. A product breaks even at a ROAS of 1 ÷ its contribution margin. With a 30% margin that is 3.33, so a ROAS of 3 loses €0.10 for every €1.00 of ad spend: an ROI of −10%. Illustrative data.

### How do you convert ROAS to ROI?

Multiply ROAS by the contribution margin and subtract 1. A ROAS of 4 on a 40% margin gives 4 × 0.40 − 1 = 0.6, an ROI of 60%. The middle step, 1.6, is the POAS.

## Sources

- [Google Ads Help: About Target ROAS bidding](https://support.google.com/google-ads/answer/6268637)

## Keep reading

- [Return on ad spend (ROAS)](https://www.productmetrics.io/glossary/roas): The formula and why each product has its own break-even.
- [Marketing ROI](https://www.productmetrics.io/glossary/marketing-roi): Profit after costs as a share of marketing spend.
- [Contribution margin](https://www.productmetrics.io/glossary/contribution-margin): The margin that turns ROAS into ROI.
- [Break-even ROAS calculator](https://www.productmetrics.io/break-even-roas-calculator): Find the return each product needs to break even.
- [POAS vs ROAS](https://www.productmetrics.io/blog/poas-vs-roas): Profit on ad spend, the per-euro form of ROI.

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Written by Berend Vrakking, founder of Product Metrics. Last updated 2026-10-07.

HTML version: https://www.productmetrics.io/glossary/roas-vs-roi