Enter your ad budget, cost per click, conversion rate, order value and margin to see whether a Google Ads or Meta campaign will make money, and what ROAS you need to break even.
Gross margin is what is left of each sale after the cost of the product or service, before ads. A business selling a 60 item that costs 36 to make and ship has a 40% margin.
ROAS on its own can fool you
ROAS, return on ad spend, is revenue divided by ad cost. Spend 1,000 and make 3,000 in sales and your ROAS is 3, or 300%. It sounds great, but whether it is profitable depends entirely on your margin. If each sale only leaves you 25% after product costs, a ROAS of 3 loses money.
That is why this calculator asks for your gross margin and shows your break-even ROAS:
Break-even ROAS = 1 ÷ gross margin
At a 40% margin you need a ROAS of 2.5 just to cover the ads. At 25% you need 4. Anything above that number is profit; anything below is a loss, however good the ROAS looks in the ad dashboard.
Maximum cost per conversion
The same idea works per sale. If your average order is 60 and your margin is 40%, each sale earns you 24 before ads. That 24 is the most you can pay for a conversion without losing money. Set your target CPA bid comfortably below it, so there is profit left after returns and other costs.
Using the planner before you spend
The calculator also works out how many clicks and conversions a budget should buy. If the result is a loss, it tells you the cost per click or conversion rate you would need to break even. That gives you a clear choice:
- Lower the cost per click with tighter keywords, better Quality Score or less competitive times.
- Raise the conversion rate with a faster, clearer landing page.
- Raise the order value with bundles or a free shipping threshold.
- Or accept that this product or keyword doesn’t pay through ads.
Make sure the conversion numbers you plan with are real. Our guide to Google Ads conversion tracking explains how to set it up properly, and the search terms report shows where your budget is actually going.
Common questions
What is a good ROAS?
One that is above your break-even ROAS by a comfortable margin. A shop with 60% margins can do well at a ROAS of 2.5, while one with 20% margins needs more than 5.
What is the difference between ROAS and ROI?
ROAS compares revenue with ad spend only. ROI looks at profit after all costs, including products, fees and staff time. ROAS is quicker to track day to day, but ROI tells you whether the business is better off.
Should I include shipping and fees in margin?
Yes, if you pay them. Gross margin here means what is left from an average sale after the cost of goods, shipping, payment fees and discounts, before advertising.
Does this work for lead generation?
Yes. Use the average value of a lead that becomes a customer as the order value, and your lead-to-sale profit as the margin. The break-even numbers work the same way.