ROAS calculator

The calculator Your return on ad spend, and the contribution under it

Reading ROAS against the contribution under it — not the number on its own — is the discipline in Dropshipping: Basics →

How to read it ROAS is not profit

ROAS is return on ad spend — revenue divided by what you paid to advertise. A ROAS of 4× means every $1 of ads brought back $4 in sales. That sounds like plenty, and it's the number most dashboards put front and center. But a high ROAS is not the same as profit. ROAS only compares revenue to ad spend; it says nothing about what the products in those orders cost you. A 4× ROAS still loses money if your product cost is high enough — which is exactly why the contribution line on this calculator matters more than the ROAS number.

So read the two figures together. The ROAS tells you how hard the ads worked at turning spend into revenue. The contribution line tells you whether, after the product and fulfillment cost of those orders and the other variable costs you entered came out, the campaign left you anything. When the contribution is positive you're in the black on the costs you entered; when it's negative you were paying to move stock at a loss, no matter how healthy the ROAS looked on screen. The more of your variable costs you enter in the Other box — fees, taxes, returns — the closer this contribution comes to your real result; leave them out and it's just revenue minus ad spend and product cost, which flatters it. Even with everything in, it's contribution, not full accounting profit — it still leaves out fixed overhead and income tax.

The formula, in full

ROAS = revenue from the ads ÷ ad spend. That's the raw efficiency of the spend, shown here as a multiple like 4.0×. Contribution after the costs you entered = revenue − ad spend − product and fulfillment cost of those orders − other variable costs. That's what the campaign left once the advertising, the goods and any fees, taxes and returns you entered came out. The verdict simply reads that contribution: above zero is positive after the costs you entered, exactly zero is break-even on those costs, below zero is negative.

A worked example

A campaign brings in $2,000 in sales. You spent $500 on the ads, the products and fulfillment for those orders cost $700, and there were no other variable costs to add. ROAS is 2,000 ÷ 500 = 4.0× — strong on paper. Contribution is 2,000 − 500 − 700 − 0 = $800, so the campaign is well in the black on the costs you entered. Now hold the ROAS at 4.0× but add $800 of payment fees, taxes and expected returns in the Other box: contribution becomes 2,000 − 500 − 700 − 800 = $0, exactly break-even. Identical ROAS, and the campaign now clears nothing. The ROAS number did not move; the contribution line is the one that told the truth once the real costs went in.

The link to break-even ROAS

If this tool tells you the ROAS you got, its companion tells you the ROAS you needed. Your break-even ROAS is the minimum return that just covers your costs — the exact line where the margin each order makes before advertising equals the ad cost, so you finish level. Work that line out first, then compare it to the real ROAS here: beat the break-even figure and you're contribution-positive, come in under it and you're not. The two tools are the before and after of the same question. Find your minimum with the break-even ROAS calculator →

Edge cases the calculator handles

• No ad spend entered — with ad spend at zero there is no return on ad spend to divide, so ROAS shows "—". The contribution line still works, but ROAS needs real spend to mean anything.
• Cost set to zero — leave the product and fulfillment cost at 0 and you see ROAS on its own, with contribution reading revenue minus ad spend only. Useful for a quick ROAS check, but remember that figure ignores what the goods cost, so it flatters a campaign that hasn't paid for its stock yet.
• What the contribution line still leaves out. It only counts what you type in. Unless you've put them in the Other box, it does not include payment or platform fees, transaction taxes, returns, chargebacks, discounts or fixed overhead — any of which can flip a positive result to a negative one. Enter your fees, taxes and expected returns to bring it closer to your real result; even then read it as contribution, not full accounting profit.

Common questions

My ROAS is high but the verdict says I'm negative — how?

Because ROAS only compares revenue to ad spend and ignores what the products and the other variable costs took out. A 4× ROAS looks great, but if the goods, fulfillment, fees, taxes and returns behind those orders ate more than the revenue left after ad spend, the campaign still runs at a loss. The verdict reads the contribution after every cost you entered, so it catches what the ROAS number alone misses.

What ROAS do I actually need?

That's your break-even ROAS — the minimum return that covers your costs. It depends on your margins, not on any single rule of thumb, so work it out from your own numbers with the break-even ROAS calculator, then aim comfortably above it so returns and slow days still leave you contribution-positive.

Is this financial advice or a guarantee?

No. It's arithmetic on numbers you enter, not financial advice. What a campaign actually earns depends on the product, the ad platform and buyers, none of which this box controls. It simply turns your real revenue, spend and costs into a ROAS and the contribution left after the costs you entered.