How to use this calculator
- Enter your profit margin before ads: selling price minus product cost, shipping and fees, as a share of the price. The break-even ROAS calculator works it out from your costs.
- Enter the target margin you want to keep after paying for ads.
- Optionally add your average order value for the maximum CPA, and your ad budget to see the revenue it must generate.
Target ROAS formula
Target ROAS = 1 ÷ (Margin before ads − Target margin)
Here is where it comes from. Revenue from ads times your margin before ads is the profit available to pay for ads. You want to keep the target margin of that revenue, so ad spend can use only the difference: Ad spend = Revenue × (Margin − Target). Dividing revenue by ad spend gives the formula above.
The same difference is your target ACoS, and multiplying it by your order value gives your maximum CPA per order.
Worked example
Your margin before ads is 50%, you want to keep 20% after ads, your average order is $60 and you plan to spend $2,000 on ads.
- Break-even ROAS: 1 ÷ 0.50 = 2.00
- Target ROAS: 1 ÷ (0.50 − 0.20) ≈ 3.33, or 333%
- Target ACoS: 50% − 20% = 30%
- Max CPA: $60 × 30% = $18.00 per order
- Revenue needed: $2,000 × 3.33 ≈ $6,666.67, leaving about $1,333.33 of profit (20%)
Target ROAS by margin
The break-even column is the ROAS at which you keep nothing after ads.
| Margin before ads | Break-even | Keep 10% | Keep 20% |
|---|---|---|---|
| 30% | 3.33 | 5.00 | 10.00 |
| 40% | 2.50 | 3.33 | 5.00 |
| 50% | 2.00 | 2.50 | 3.33 |
| 60% | 1.67 | 2.00 | 2.50 |
Thin margins push the target up fast: at a 30% margin, keeping 20% needs a ROAS of 10. In that situation, improving the margin (see the profit margin calculator) usually does more than optimising campaigns.
Using target ROAS in ad platforms
Bid strategies that optimise for a return on ad spend need your target as an input. Google Ads' Target ROAS bidding takes it as a percentage, so a target of 3.33 is entered as 333%. Whatever the platform, the target is only as good as the conversion values it measures: if the platform counts revenue including tax or shipping, adjust your target, or your margin, to match.
Frequently asked questions
What is target ROAS?
Target ROAS is the return on ad spend you need to keep a chosen profit margin after paying for ads. It is higher than break-even ROAS when your target margin is positive; at a 0% target margin they are equal. This is contribution profit before fixed overhead and taxes, not business net profit.
How do you calculate target ROAS?
Target ROAS = 1 ÷ (margin before ads − target margin), with both margins as decimals. With a 50% margin before ads and a 20% target margin, target ROAS = 1 ÷ (0.50 − 0.20) ≈ 3.33.
What is the difference between target ROAS and break-even ROAS?
Break-even ROAS (1 ÷ margin before ads) is the point where ads exactly pay for themselves. Target ROAS adds the profit you want to keep on top. With a 50% margin, break-even ROAS is 2.00 while a 20% target margin needs 3.33.
How do I enter target ROAS in Google Ads?
Google Ads' Target ROAS bid strategy takes the value as a percentage, so multiply your target ROAS by 100: a target ROAS of 3.33 is entered as 333%. Google calculates ROAS from the conversion values you track, so make sure those values are measured the same way as your margin.
What target margin should I choose?
Your margin before ads only covers costs that grow with each order. Rent, salaries, software and other fixed costs have to be paid from the profit left after ads, so choose a target margin that covers them plus the profit you want. A higher target means a higher target ROAS, which usually limits how much you can scale ad spend.
Why is my target margin not reachable?
Your target margin after ads must be lower than your margin before ads. If you want to keep 30% but only earn 25% before ads, no ROAS can get you there. Raise prices, cut costs or lower the target.
What is target ACoS?
Target ACoS is the ACoS that leaves your target margin: margin before ads − target margin. With a 50% margin and a 20% target, keep ACoS at or below 30%.
By the SellerUtils team · Last updated October 1, 2026. Results are estimates for planning and are not financial advice.