In short: The calculator works out ROAS and cost of sale from ad spend and revenue, margin and markup from selling and cost price, your break-even ROAS and how many orders or leads a Google Ads budget can bring. It is free, needs no sign-up and explains every result.
How ROAS, cost of sale and margin are calculated
All three metrics come from the same numbers: what your ads cost, how much you sell and how much of each sale you keep. These are the formulas the calculator uses.
Return on ad spend. €500 of ads and €2,500 of net revenue give a ROAS of 5, often written as 500 %. The higher, the better.
Ad spend as a share of revenue, also known as ACoS on Amazon. With the same numbers, COS is 20 %. The lower, the better.
Two views of the same thing. A COS of 25 % is a ROAS of 4, a COS of 10 % is a ROAS of 10. The other way round, COS = 100 / ROAS.
The share of the net selling price you keep after paying for the goods. Selling for €100 and buying for €60 is a 40 % margin.
The same difference, but based on the cost price. In the same example the markup is 66.7 %, which is why it is always higher than the margin.
The lowest ROAS at which you still do not lose money. With a 25 % margin it is 4. Below it, every sale from ads costs you money.
Margin vs markup: what is the difference
Margin and markup are often mixed up, even though they describe the same profit on a sale. The difference is the amount they are calculated from. Here is an example with a product you buy for €60 and sell for €100 excluding VAT:
€40 profit divided by the €100 selling price. Margin tells you what share of each sale you keep, which is why you compare it with COS and ROAS.
€40 profit divided by the €60 cost price. You use markup when you set a selling price based on the cost price.
Always use margin when you evaluate advertising. If you compared COS with markup, your ads would look more profitable than they really are.
What is a good ROAS?
There is no single number that works for everyone. Your margin sets the limit: an online store with a 50 % margin can still make money at a ROAS of 3.3, while at a 20 % margin the same ROAS means a loss. From your margin you also need to subtract costs per order such as free shipping or payment fees, and leave room for wages, running costs and profit. That is why a good target ROAS is usually well above your break-even ROAS.
This table helps you convert COS and ROAS quickly:
| COS | ROAS | ROAS in % | From €1 of ads |
|---|---|---|---|
| 5 % | 20 | 2,000 % | €20 revenue |
| 10 % | 10 | 1,000 % | €10 revenue |
| 15 % | 6.67 | 667 % | €6.67 revenue |
| 20 % | 5 | 500 % | €5 revenue |
| 25 % | 4 | 400 % | €4 revenue |
| 30 % | 3.33 | 333 % | €3.33 revenue |
| 40 % | 2.5 | 250 % | €2.50 revenue |
| 50 % | 2 | 200 % | €2 revenue |
With returning customers it can make sense to win the first purchase at a lower ROAS. In that case, look at customer lifetime value, not just a single order.
How to estimate your Google Ads budget
The estimate rests on three numbers: what a click costs, what share of visitors buy or send an enquiry, and the value of an order or deal. You will find cost per click and conversion rate in Google Ads and Google Analytics. If you are just starting out, run the calculator with cautious numbers and replace them with real data after the first month.
To learn what drives the cost per click and how much budget makes sense, see our Google Ads cost page. If you would rather hand your campaigns to specialists, take a look at our Google Ads agency service.
Useful terms
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Links with UTM parameters, the GA4 channel and a QR code.
Frequently asked questions
How do you calculate ROAS?
Divide revenue from ads by ad spend. With €2,500 revenue and €500 spend, ROAS is 5, or 500 %. Every euro spent on ads brought in €5 of revenue.
What is a break-even ROAS?
The ROAS at which your ads neither make nor lose money. Calculate it as 100 divided by your margin after all costs per order. With a 25 % margin, break-even ROAS is 4.
How do COS and ROAS relate?
They are two views of the same thing. ROAS equals 100 divided by COS, and COS equals 100 divided by ROAS. A COS of 20 % is a ROAS of 5, or 500 %.
Should I use revenue with or without VAT?
Usually without VAT, because VAT is not your income and ad spend is also shown excluding VAT. When you compare numbers from different tools, check which amount they use.
What is the difference between margin and markup?
Margin is profit as a share of the selling price, markup is profit as a share of the cost price. Buying for €60 and selling for €100 excluding VAT gives a 40 % margin and a 66.7 % markup.
What is a good ROAS for an online store?
There is no universal number. Your margin is the limit: if COS is higher than your margin, your ads lose money. With a 30 % margin, keep ROAS well above 3.3 so there is something left for other costs and profit.
How much should I spend on Google Ads?
It depends on the cost per click in your industry, your site’s conversion rate and your margin. The budget calculator shows how many orders or leads and how much revenue to expect at a given budget, and the cost per click at which ads still pay off.
Do you store the numbers I enter?
No. The calculator runs in your browser and sends your numbers nowhere. To save or share a calculation, copy the link or save the result as a PDF.
Want better results from Google Ads?
As a Google Partner we manage campaigns for ecommerce and service businesses. In a free consultation we review your ROAS, cost per click and conversions and show where your ads waste money.
The first 60 minutes are free, in person in Bratislava or online.
See also our Google Ads management and the free SEO checker.