Online sellers and marketers hear ROAS and ROI all the time. They look alike but measure different things, and watching ROAS alone can make a loss look like a win. Here are the formulas with examples.
In short
| ROAS | ROI | |
|---|---|---|
| Measures | Sales per unit of ad spend | Gain or loss against the amount invested |
| Formula | Sales ÷ ad spend | (Amount back − invested) ÷ invested × 100 |
| Subtracts product cost? | No | Yes (it uses what you actually got back) |
| Calculator | ROAS calculator | ROI calculator |
What ROAS is
ROAS (return on ad spend) compares the sales an ad brought in with what it cost. Google Ads gives the example $5 in sales ÷ $1 in ad spend × 100% = 500% ROAS; many dashboards show it as a multiple, such as 5.00×.
Example: you spend 12,000 baht on ads and make 45,000 baht in sales.
- ROAS = 45,000 ÷ 12,000 = 3.75×, or 375%
Why ROAS above 1 can still lose money
ROAS uses sales, not profit. Those 45,000 baht still have to pay for the goods, shipping and fees.
Break-even ROAS: counting only product cost and ad spend, you break even when the gross profit on the sales equals the ad spend. Rearranged:
Break-even ROAS = 1 ÷ gross margin
| Gross margin | Break-even ROAS |
|---|---|
| 50% | 2× |
| 40% | 2.5× |
| 30% | 3.33× |
| 25% | 4× |
| 20% | 5× |
In the example, with a 25% margin, 3.75× is below 4×, so the ads lost money. Find your margin with the profit margin calculator. The table is worked out from the formula above and leaves out other costs; shipping or platform fees raise the break-even point further.
What ROI is
ROI (return on investment) is the gain or loss relative to what you put in. OpenStax’s Principles of Finance describes the holding-period return as (ending price − beginning price) ÷ beginning price, and total return also counts dividends received along the way.
ROI = (total amount back − amount invested) ÷ amount invested × 100
Examples
- Invest 10,000, get back 12,000 → ROI 20%
- Invest 10,000, get back 8,500 → ROI −15% (a loss)
Count income along the way, such as dividends, rent or interest, in the amount back.
Careful: ROI ignores time. 20% over five years is not 20% a year; for returns over time, try the compound interest calculator.
Which to use when
- To see which ads drive sales, compare ROAS across campaigns.
- To see whether a project or investment paid off, use ROI on what you actually got back after all costs.
- To set a ROAS target, start from your product’s gross margin and work out break-even ROAS first.
Note
This article is based on Google Ads Help and OpenStax’s Principles of Finance, read on 25 September 2026. The break-even ROAS formula is rearranged from the definitions above, not quoted from a source.
