Repeat purchases
A customer worth 900 once is a different proposition from one worth 900 a year for four years, and a channel that looks unprofitable on the first sale can be the best one you have.
Free tool
Marketing ROI and ROAS calculator
with the break-even you actually have to beat
Put in one month of real figures and see whether the spend paid for itself - and by how much. The number most calculators leave out is break-even ROAS, which is the only one that tells you whether a 3x return is good or not.
Calculator
Work out what your marketing actually returns
Use one month, and only revenue you can trace back to the spend. Every figure updates as you type.
The method
How this marketing ROI calculator works
Five lines of arithmetic, all of them standard.
ROAS = revenue / spend
It is a revenue ratio, so on its own it says nothing about profit.
Gross profit = revenue x gross margin
This is the money marketing actually has to work with.
Break-even ROAS = 1 / gross margin
At a 45% margin you need 2.22x before the spend washes its face; at 20% you need 5x.
Return on marketing spend = (gross profit - spend) / spend, as a percentage
Zero means you broke even.
CAC = spend / new customers
Compare it with gross profit per customer, not with revenue per customer.
Worth knowing
What this does not account for
Sales cycle
If your average deal takes three months to close, this month's revenue was bought by spend from three months ago.
Attribution
Revenue you cannot trace to the spend should be left out, even when you suspect the spend helped. Overstating it here is the most common way this calculation flatters a channel.
Fixed costs
Gross margin is before overheads, so a positive figure here is not the same as a profitable business.
FAQ
Questions about this calculator
1What is a good ROAS?
There is no universal figure, which is exactly why this calculator shows break-even ROAS beside it. A 3x return is strong on a 20% margin and losing money on a 60% one. Compare the two numbers on the right, not the ROAS on its own.
2Where do the formulas in this marketing ROI calculator come from?
They are the standard definitions, not ours. Return on marketing spend follows return on marketing investment as it is normally defined, and break-even ROAS is the same idea Google describes under target ROAS bidding: the return your margin forces you to reach before a sale makes money.
3Should I use gross margin or net margin?
Gross margin - revenue less the direct cost of delivering the sale. Net margin already has overheads taken out of it, and marketing spend is one of those overheads, so using it would count the spend twice.
4What counts as marketing spend?
Everything you would stop paying if you stopped marketing: media spend, agency or freelancer fees, campaign tools, content production. Salaries of people who only do marketing belong in there too if you want the honest figure.
5My CAC is higher than my gross profit per customer. Is that always bad?
Not always, but it means you are buying customers at a loss on the first sale and relying on them coming back. That is a legitimate strategy if you know your repeat rate. It is a serious problem if you are assuming one.
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