Free tool

Target ROAS Calculator

Most brands set a target ROAS from feel. This backs into the real one from your margins: the return you need to break even, and the return to aim for so ads leave the profit you want. Two numbers to start; add detail only where it changes the answer.

Factor in other variable costs Shipping and fees, returns, sales tax
Factor in repeat customers Results switch from one order to a customer’s lifetime
Compare with my current ads See where you sit against the target
Show the working
Order value after tax and returns
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Profit per order before ads
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Orders per customer, lifetime
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Lifetime revenue per customer
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Lifetime profit per customer before ads
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Target ROAS formula
order value ÷ (lifetime profit − lifetime revenue × margin)
Break-even ROAS
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Below this you lose money on every order
Break-even CPA
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Most you can pay per order

Set your target ROAS to

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20%

break-even
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target
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How to use this calculator

Five minutes with your store’s numbers to hand. Results update as you type.

  1. 1Enter what an average order sells for and what the product costs you. Average order value is in your store’s analytics (Shopify: Analytics → Average order value). Product cost is what you pay for the goods in that order, landed. Those two alone give you break-even.
  2. 2Factor in other variable costs if they’re more than a few percent. Shipping and packaging you pay per order, payment fees, and the share of orders that come back. Leave the row closed if you don’t know them; it changes nothing until you type.
  3. 3Factor in repeat customers only if you know the numbers. The share of customers who order again and how many more orders they place. This switches every result from one order to a customer’s lifetime, and lets you pay more to win the first order.
  4. 4Set the profit margin you want after ads. Most brands land between 10% and 30%. The calculator caps the slider where your economics run out; the closer you push to that ceiling, the less you can spend to win each order.
  5. 5Read the two numbers. Break-even ROAS is the floor: below it every order loses money. Target ROAS is what you enter into Google or Meta. The split beneath it shows where each dollar of an order goes at that target: product and costs, ads, profit.
  6. 6Compare with your current ads to see where you stand. Your last 30 days of spend and revenue from the platform’s reporting. You’ll get the period as a profit statement and how many points above or below target you ran.

How it’s worked out

Take the example the calculator opens with: a $75 order that costs $30 to make.

  1. 1Profit per order before ads is order value minus product and other costs: $75 − $30 = $45. That is also the most you can pay to win an order, the break-even CPA.
  2. 2Break-even ROAS is order value divided by that profit: $75 ÷ $45 = 167%. Spend $1 on ads, get $1.67 back, and the $1 of ads plus $0.67 of product are covered exactly.
  3. 3Target ROAS holds back the margin you want first. For 20% of the order, $15, the profit left to spend on ads is $45 − $15 = $30, so the target is $75 ÷ $30 = 250%.
  4. 4Repeat customers multiply the profit and revenue by the orders a customer places over their lifetime before steps 2 and 3, with the ad cost counted once. Returns and tax reduce the order value before step 1; shipping and fees come off with the product cost.

What each ROAS pays

Profit per $1 of ad spend at the economics you entered above. Updates with the calculator.

ROAS Revenue per $1 of ads Profit per $1 of ads Margin after ads

Higher ROAS is not automatically more profit

Turn the budget up and revenue keeps climbing, but each extra dollar buys a little less than the one before: the cheapest customers get reached first. Profit climbs too, until the extra revenue stops covering the extra spend, then it falls. ROAS slides the whole way, high when you spend little, low when you spend a lot.

So the most efficient campaign and the most profitable one are different campaigns. Where your peak sits depends on how much demand exists at each price, which this calculator can’t know; a spend test or the platform’s bid landscape can. Your target ROAS is the floor that keeps you out of the right-hand side, not a score to push to the left.

revenue from ads profit after product costs and ad spend
most total profit break-even spend past here loses money Ad spend high ROAS · small scale low ROAS · large scale revenue still rising, but slower

Three things worth knowing

Break-even is not 100%

At 100% ROAS your ads pay for themselves and nothing else. Break-even is where they also pay for the product, shipping and fees inside every order. Below it, each sale costs you money.

Aim at the target, not break-even

Platforms land around the number you give them, on both sides. Set break-even as the goal and half your spend runs at a loss. Set the target and the misses still make money.

Lifetime lets you pay more up front

If customers reorder without more ads, the first order can lose a little and the customer still profits. Lifetime break-even can sit under 100%. That is fine only if you can wait for the reorders.

Before you lean on repeat customers

The lifetime mode is where the tool is most useful and most easily abused. Four checks before you set a target from it.

Is yours a repeat business at all?

Consumables, supplements, apparel and pet food reorder. Mattresses, roofs, wedding dresses and most services don’t. If a customer buys once every few years, run the calculator on one order and leave the repeat row closed, however tempting the lower target looks.

Put a window on “lifetime”

Count the repeat orders a customer places in a fixed period, usually 12 months, and use the share of customers who really came back in your data, not the share you hope will. A 47% returning rate from one good cohort becomes 25% across everyone.

Subscriptions: treat renewals as the repeat orders

Order value is the first payment. Returning-customer rate is the share who make it past the first renewal, and repeat orders is how many renewals they make inside your window. Churn does the work here: a 10% monthly churn means roughly 9 more payments on average, a 25% churn means 3.

Know your payback period

A lifetime target below your per-order break-even means every first order loses money and the reorders pay it back later. That is fine if you have the cash to wait and the reorders come without more ad spend. If cash is tight, aim to recover the first-order loss inside 60 to 90 days, and set the target from the orders that happen within that window, not the full lifetime.

What this calculator assumes

  • Fixed costs are left out. Rent, salaries and software don’t change with each order, so the margin here is contribution margin, not the bottom line. Your target should leave enough to cover them.
  • Repeat orders come free. Ad cost is counted once per customer. If you pay to bring customers back, lifetime break-even is more generous than reality.
  • Revenue is counted the way ad platforms count it, before tax and returns. Profit is worked out after them.
  • Every order looks like your average order. Margins that vary a lot by product deserve a separate run per product line.
  • Attributed revenue is taken at face value. Platforms over-claim; if your blended numbers tell a different story, trust those.

Want a second pair of eyes on your numbers? Send them over and our paid media team will check them against your account.

Target ROAS questions

01 What is ROAS?
Return on ad spend: the revenue your ads produce divided by what you paid for them. A 300% ROAS (some tools write it 3.0×) means $3 of revenue for every $1 of ad spend. It says nothing about profit on its own, which is why break-even and target ROAS matter more than the raw number.
02 Why isn’t break-even ROAS 100%?
At 100% your ads bring in exactly what they cost, but every dollar of that revenue had a product, shipping and fees inside it. You have paid for the ads and lost the cost of goods. Break-even is the ROAS where ad revenue covers the ads and the cost of what they sold: order value divided by the profit an order leaves before ads.
03 What is a good ROAS?
One that clears your break-even by the margin you want, which depends on your economics, not on a benchmark. A 30% margin business needs roughly 333% just to break even; a 70% margin business breaks even at 143%. Published “good ROAS” figures of 300 to 500% are averages across both. Work yours out from your margin, then judge campaigns against that.
04 Should I set my target from one order or a customer’s lifetime?
One order if you don’t know your repeat rate or can’t afford to wait for it. Lifetime if customers reliably reorder without more advertising and you have the cash to lose a little on the first order for a profitable customer. The calculator’s “Factor in repeat customers” row switches between the two; the honest answer for most brands is somewhere in between, so run both.
05 How do I use this number in Google Ads or Meta?
Google’s Target ROAS bidding takes the figure as a percentage, so a 250% target is entered as 250. Meta’s ROAS goal takes the multiple, 2.5. Set it at your target, not your break-even: the platform will land around the number you give it, and giving it break-even leaves no margin for the misses. Revisit it when margins, prices or shipping costs change.
06 Why not just aim for the highest ROAS possible?
Because ROAS and volume pull against each other. The highest ROAS comes from spending only on the surest customers, which is a small group. Every step down in ROAS toward your target opens up more people who are still profitable to reach. The right target is the lowest ROAS that still leaves the margin you want, because that is where you can spend the most and still make money.
07 Can I use this for a subscription product?
Yes. Enter the first payment as the order value and the cost of fulfilling one period as the product cost. Open “Factor in repeat customers” and use the share of subscribers who make it past their first renewal as the returning rate, and the average number of renewals inside your payback window as the repeat orders. Average renewals are roughly one divided by your monthly churn, so 10% churn is about nine more payments. Keep the window honest; a subscriber who might still be paying in year three does not help you make payroll in month two.
08 Does this work for lead generation?
Yes, with two translations. Use the value of a closed deal times your close rate as the order value (a $5,000 job you win one time in five is worth $1,000 per lead), and the cost of delivering that job as the product cost. Everything else works the same, and the “Compare with my current ads” row will read your lead-gen spend and revenue as normal.

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