Add your ad spend and revenue to get your return on ad spend. Add your margin and we will work out your break-even ROAS and your real profit or loss after ads.
ROAS (return on ad spend) is revenue from ads divided by ad spend. £4,000 from £1,000 of ads is a 4x ROAS, or 400%. A good ROAS is one above your break-even ROAS, which is 1 divided by your profit margin. At a 50% margin you break even at 2x.
Who this is for: Coaches, consultants and founders running paid ads who want to know if the ads actually make money.
ROAS stands for return on ad spend. It tells you how much revenue came back for every unit of currency you put into ads. The formula is simple: ROAS = revenue from ads ÷ ad spend.
Spend £1,000 and make £4,000 in sales from those ads, and your ROAS is 4, usually written as 4x or 4:1. As a percentage it is 400%. Both mean the same thing: £4 back for every £1 spent.
The catch is that ROAS measures revenue, not profit. A 4x ROAS sounds good, but if each sale only leaves you 20% after costs, you are losing money. That is why the break-even number matters more than the headline one.
Break-even ROAS is the point where your ads pay for themselves and no more. The formula is break-even ROAS = 1 ÷ profit margin, where profit margin is what you keep from a sale after the cost of goods or delivery and fees, before ads.
If you sell something for £100 and it costs £45 to make and £5 in fees, you keep £50. That is a 50% margin, so your break-even ROAS is 1 ÷ 0.5 = 2x. Below 2x you lose money on every sale the ads bring in. Above it, you make money.
| Profit margin | Break-even ROAS | As a percentage |
|---|---|---|
| 80% | 1.25x | 125% |
| 60% | 1.67x | 167% |
| 50% | 2x | 200% |
| 40% | 2.5x | 250% |
| 30% | 3.33x | 333% |
| 20% | 5x | 500% |
Notice how fast it climbs as margins shrink. Low-margin products need a very strong ROAS just to stand still.
A commonly quoted rule of thumb is 4x, but on its own that number means little. A good ROAS is one comfortably above your own break-even. For a coach with an 80% margin, 2x is profitable. For a shop with a 25% margin, 4x only just breaks even.
Two other things change the picture. If customers buy again, a ROAS below break-even on the first sale can still be worth it, as long as you know your customer lifetime value. And if you are testing a new offer, a short period near break-even is normal while you learn.
For coaches, consultants and service businesses, measure ROAS on cash collected, not contract value or what the ad platform reports. A client who signs a £3,000 programme on a payment plan and pays £500 this month has given you £500 so far. Ad platforms also miss most sales that happen on a call days later, so their ROAS figure is often wrong in both directions.
In our experience the ads are rarely what kills ROAS for a coach. The funnel after the click is. Picture £1,000 of ads bringing in 40 leads. If only 8 book a call and 1 becomes a client, the ads look broken. If 16 book and 4 become clients, the same ads look brilliant. Nothing about the ads changed.
So track each step: lead to booked call, booked call to call that happened, and call to client. The weakest step is usually where the money is.
No. ROAS only compares ad revenue with ad spend. ROI compares profit with your total investment, so it accounts for the cost of goods, fees and other costs. You can have a ROAS above 1 and still lose money.
Divide revenue from ads by ad spend and multiply by 100. For example, £3,000 in revenue from £1,000 of ads is 3 × 100 = 300%, the same as a 3x ROAS.
There is no single good number. A commonly cited rule of thumb is around 4x, but what matters is your break-even ROAS, which is 1 divided by your profit margin. Anything comfortably above that is working.
Yes. Use the cash you have actually received from clients who came from the ads, not the full contract value or the platform's reported revenue. It gives an honest picture of whether the ads pay for themselves.
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