ROAS Formula – How to Calculate Your Return on Ad Spend Manually
ROAS Formula
Revenue Generated by Ad Spend divided by Ad Spend
- (Revenue Generated by Ad Spend / Ad Spend)
- Example #1: $4000 in revenue generated from $1000 in ad spend is $4000 / $1000 = 4 or 400% ROAS.
- Example #2. $40,000 in revenue generated from $50,000 in ad spend is $40,000 / $50,000 = .8 or 80% ROAS.
Projected ROAS Formula for eCommerce
Advertising budget divided by average cost per click times average conversion rate times average order value divided by advertising budget.
- ((((Advertising Budget / Average Cost Per Click) x Average Conversion Rate) x Average Order Value) / Advertising Budget)
- Example #1. ((($10,000 / $5) * .03)*$250) / $10,000 = 1.5 or 150% ROAS.
- Example #2 ((($5,000 / $2) * .05)*$55) / $5,000 = 1.375 or 137.5% ROAS.
Projected ROAS Formula for Non-eCommerce
Advertising budget divided by average cost per click times average conversion rate times average conversion rate from lead to customer times average lifetime value of a customer divided by advertising budget.
- (((((Advertising Budget / Average Cost Per Click) x Average Conversion Rate) x Average Conversion Rate from Lead to Customer) x Average Lifetime Value of a Customer) / Advertising Budget)
- Example #1. (((($15,000 / $20) * .09)*.12)*$12,500) / $15,000 = 6.75 or 675% ROAS.
- Example #2. (((($25,000 / $25) * .08)*.20)*$6000) / $25,000 = 3.84 or 384% ROAS.
Skip All the Math and use our ROAS Calculator