---
title: "What is ROAS? Formula and example | Product Metrics"
description: "ROAS (return on ad spend) is the revenue your ads earn per euro spent. The formula, a worked month, and why every product breaks even at its own ROAS."
canonical: "https://www.productmetrics.io/glossary/roas"
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

# Return on ad spend (ROAS)

Return on ad spend (ROAS) is the revenue your ads generate for every euro you spend on them.

## Formula

`ROAS = revenue from ads ÷ ad spend`

Revenue means conversion value. Write it as 4, 4:1 or 400%: all three mean €4.00 of revenue for every €1.00 spent.

## Example

One month of ads:

| Step | Value |
| --- | --- |
| Ad spend | €2,000.00 |
| Revenue from ads | €8,000.00 |
| ROAS (€8,000.00 ÷ €2,000.00) | 4 |

A ROAS of 4 means every €1.00 of ad spend brought back €4.00 of revenue. Revenue, mind, before a single product has been paid for. Illustrative data.

## For one product, and for an account

Per product, ROAS is that product’s conversion value divided by its own ad cost. The account figure mixes products with different margins, so a healthy average can be carried by one product while another loses money.

ROAS counts revenue, and revenue still has the product cost in it. A product with a 25% margin breaks even at a ROAS of 4 (1 ÷ 0.25), and a product with a 50% margin at 2 (1 ÷ 0.50). The same ROAS of 4 only covers the costs of the first product and earns a profit on the second.

## Common mistake

Judging ROAS against a general benchmark instead of the product’s own break-even. A benchmark ignores margin, returns and shipping.

## Questions

### What is a good ROAS?

A good ROAS is one above the product’s own break-even ROAS, which is 1 ÷ its margin. A product with a 25% margin needs more than 4 to earn a profit, and a product with a 50% margin needs more than 2. A shop-wide target is a compromise between lines like these.

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

ROAS divides revenue by ad spend, so it ignores what the products cost. ROI divides the profit left after costs and ad spend by the ad spend. A ROAS of 4 can still be a poor return when the margin is thin.

## Keep reading

- [Break-even ROAS calculator](https://www.productmetrics.io/break-even-roas-calculator): Find the return each product needs to break even.
- [What is a good ROAS?](https://www.productmetrics.io/blog/what-is-a-good-roas): Read your ROAS against each product’s own break-even.
- [Break-even ROAS per product](https://www.productmetrics.io/blog/break-even-roas-per-product): The four steps, with a worked example.
- [Product Segmentation](https://www.productmetrics.io/product-segmentation): See each product in one of six segments, by volume and return.
- [Marketing ROI](https://www.productmetrics.io/glossary/marketing-roi): Profit after costs, where ROAS counts revenue.
- [Incrementality](https://www.productmetrics.io/glossary/incrementality): What ROAS cannot show: the sales that happened because of the ads.
- [How to calculate ROAS](https://www.productmetrics.io/blog/how-to-calculate-roas): The formula step by step, for an account and for one product.
- [How to improve ROAS](https://www.productmetrics.io/blog/how-to-improve-roas): Fix the products that lose money instead of chasing the ratio.
- [POAS vs ROAS](https://www.productmetrics.io/blog/poas-vs-roas): Profit on ad spend: the same ratio with costs taken out.

---

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

HTML version: https://www.productmetrics.io/glossary/roas