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.

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