Step-by-step walkthrough
Use this companion guide beside the interactive calculator to make sure you understand the “why” behind every click. Each section includes the classroom explanation, student-friendly language, and quick practice prompts.
Collect the data points listed below and double-check their units. Keeping an organized “givens” list is one of the fastest ways to reduce math errors and impress exam graders.
Step 1
Enter total ad spend and the revenue directly attributable to those ads.
Step 2
Enter your gross margin — revenue minus cost of goods sold, as a percentage of revenue.
Step 3
Compare your ROAS to the break-even ROAS: above it means the campaign is profitable after cost of goods, below it means you're losing money per dollar of ad spend.
ROAS measures revenue against spend, not profit against spend. A low-margin product needs a much higher ROAS to be profitable than a high-margin one — always check ROAS against your break-even point, not against a generic benchmark.
ROI typically nets out all costs (including cost of goods) to measure profit directly, while ROAS is a simpler revenue-to-spend ratio media buyers use for quick campaign comparisons. This calculator bridges the two by layering your margin on top of ROAS.
