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ROAS Target Calculator

ROAS is the most misunderstood metric in ecommerce ads. Find out what return on ad spend you actually need to be profitable — not just to look good on paper.

Your Margins

Profit after cost of goods sold (COGS only). Revenue minus what you paid for the product.

%

Fixed and variable costs as a % of revenue: rent, wages, subscriptions, packaging, fulfilment etc.

%
Advanced Inputs (optional) ▼

How much profit you want to keep after all costs including ads. Default is 10%.

%

Used to calculate your max viable CPA alongside the ROAS target.

$
Required ROAS to Hit Profit Target
—
The return on ad spend you need to achieve your target net profit after all costs.
Breakeven ROAS
—
Ad Spend Budget %
—
Breakeven ROAS
—
Min ROAS to cover all costs (no profit).
Contribution Margin
—
Gross margin minus operating overhead.
Max Ad Budget %
—
Ad spend you can afford as % of revenue.
Max CPA
—
Max cost per sale (requires AOV input).

How It's Calculated

1
Contribution Margin
Gross Margin % − Overhead %
2
Breakeven ROAS (zero profit)
1 ÷ Contribution Margin (decimal)
3
Max Ad Spend as % of Revenue
Contribution Margin − Target Net Profit %
4
Required ROAS (with profit target)
1 ÷ Max Ad Spend % (decimal)

Where to Find Your Numbers

Not sure what to enter? Here's exactly where to find your margin and overhead figures.

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Gross Margin %

Profit after product cost only

  • 1In Shopify → Analytics → Finances → Cost of goods. Gross margin % shown storewide.
  • 2Manually: ((Revenue − COGS) ÷ Revenue) × 100. Average across your top-selling products.
  • 3Your accountant's P&L will show gross margin % in the income statement.
Tip: Use a blended gross margin across all products — don't just use your best-margin product or it'll skew the result.
🏢

Operating Overhead %

All other costs as a % of revenue

  • 1Add up: rent/storage, staff wages, SaaS subscriptions, fulfilment fees, packaging, accountant fees.
  • 2Divide total monthly overhead by total monthly revenue × 100. That's your overhead %.
  • 3Your accounting software (Xero, MYOB, QuickBooks) will show operating expenses in the P&L.
Tip: If your overhead is variable, use a 6-month average to smooth seasonal fluctuations.
🎯

Target Net Profit %

How much profit you want to keep

  • 1This is a business goal, not a data point — decide how much profit margin you need to sustain and grow.
  • 2Ecommerce benchmarks: 5–10% net is common for growing brands. 15%+ is healthy. Under 5% is tight.
  • 3Discuss with your accountant or CFO — your profit target should reflect your reinvestment strategy.
Start with 10% as a sensible default. Adjust based on whether you're in growth mode (lower) or profit mode (higher).