What is ROAS?
Return on ad spend, or ROAS, is the revenue an advertising campaign generates for every rupee spent on it, calculated as attributed revenue divided by ad spend.
Updated
ROAS is the first number most founders learn and the one most often misread. It answers a narrow question well: for this campaign, in this window, how much revenue did the platform attribute per rupee spent? It does not answer whether you made money, because revenue is not margin.
The number that matters is your break-even ROAS — the point where gross profit exactly covers ad spend. If your contribution margin after cost of goods, shipping and fees is 40%, you break even at 2.5x, and a 5.5x month is genuinely profitable. If your margin is 20%, break-even is 5x and that same 5.5x month is barely clearing costs.
This is why we quote average ROAS across a whole engagement rather than a peak month, and why we publish the worst month of every Meta ads account we write up. A single strong month tells you very little; a floor you can plan around tells you a great deal. Work out your own break-even before you judge any ROAS figure, including ours.
How ROAS is calculated
ROAS = Revenue attributed to ads ÷ Ad spend
A worked example
A Bengaluru skincare brand spends ₹1,20,000 on Meta in a month and the platform attributes ₹6,60,000 of purchase value to those ads.
- Ad spend = ₹1,20,000
- Attributed revenue = ₹6,60,000
- ₹6,60,000 ÷ ₹1,20,000 = 5.5
ROAS = 5.5x — every ₹1 of ad spend returned ₹5.50 in revenue.
Common mistakes
- Treating ROAS as profit. It is a revenue ratio: it ignores cost of goods, shipping, payment fees and returns, so a 5x ROAS on a 25% margin product still loses money.
- Comparing ROAS across brands. The number only means something against your own break-even, which depends on your margin.
- Reading platform-reported ROAS as truth. Meta and Google both count conversions they influenced, so their totals usually exceed what your bank account shows.
Want these numbers working for your brand?
A written audit in three working days, whether or not you hire us.