Target ROAS Calculator
Calculate target and break-even ROAS from your gross margin and profit goal.
Use Target ROAS Calculator
Not a guarantee; allow for fixed costs and taxes; examples are not benchmarks; formula reviewed 26 Oct 2026, with no platform data. Free, no sign-up. Runs in your browser; nothing you enter is uploaded.
How to use it
Find the ad revenue needed for each unit of ad spend while keeping your chosen profit margin.
- Enter gross margin after per-order costs, excluding ads.
- Enter the profit margin you want after ads, or 0 for break-even.
- Compare target ROAS with break-even ROAS.
Formula
Target ROAS = 100 ÷ (gross margin % − target profit margin %)
Break-even ROAS = 100 ÷ gross margin %
Ad spend limit = margin gap (% of revenue); revenue × gross margin ÷ 100 − ad spend = revenue × target margin ÷ 100
Example
Kochi skincare brand (₹)
A ₹1,299 serum kit: ₹5,00,000 sales allow ₹2,00,000 for ads and leave ₹1,10,000 before fixed costs and taxes.
- Gross margin
- 62%
- Target profit margin
- 22%
Questions
How is target ROAS different from break-even ROAS?
Break-even covers per-order costs and ads with no profit; target ROAS keeps your profit share. At 62% gross margin and 22% target, break-even is 1.61x and target is 2.50x. At 48% and 12%, they are 2.08x and 2.78x; the 36% gap allows $64.80 for ads on a $180 tote, leaving $21.60.
Which costs go into gross margin here?
Include product, packaging, delivery, payment fees and an allowance for refunds or returns. Leave ad spend out. Counting only product cost overstates your margin and understates the ROAS you need.
Why must my target profit margin be below gross margin?
Keeping all gross margin as profit leaves nothing to pay for ads. A higher target would require negative ad spend. Lower your target or check your per-order costs.
Can my target cover rent and salaries too?
Yes, as a planning allowance. Add overheads as a share of revenue to your desired profit margin. For example, 10% profit plus 8% for overheads means entering 18%. Keep the combined target below gross margin.
What if my products have different margins?
Use the margin of the product the campaign sells. For a mix of products, divide total gross profit before ads by total revenue, then multiply by 100. Do not average product percentages without weighting by revenue.
Is 2.50x the same as 250% ROAS?
Yes: 2.50 in revenue for every 1 spent on ads, in any currency. Multiply ROAS by 100 for a percentage; no currency conversion is needed. At 2.50x, the ₹1,299 serum kit allows ₹519.60 for ads, leaving ₹285.78 before fixed costs and taxes.
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