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Start Free TrialEverything you need to know about Return on Ad Spend and how to improve it.
ROAS (Return on Ad Spend) measures how much revenue you earn for every dollar spent on advertising. It's the most important metric for e-commerce advertisers and affiliate marketers.
A ROAS of 3.5x means you earn $3.50 for every $1.00 spent on ads. A ROAS below 1.0x means you're losing money on every ad dollar.
ROAS only looks at ad spend vs. revenue. ROI factors in ALL costs — cost of goods, fulfillment, software, team salaries. A campaign with a 3x ROAS might actually have a negative ROI once you account for product costs. This calculator shows you both so you see the full picture.
| ROAS | Verdict | What It Means |
|---|---|---|
| Below 1x | Losing money | You spend more than you earn. Pause and optimize. |
| 1x — 2x | Breakeven zone | Revenue covers ads, but COGS may eat your margin. |
| 2x — 4x | Healthy | Solid profitability for most e-commerce businesses. |
| 4x+ | Excellent | Strong returns. Scale up and reinvest. |
There are only two levers: increase revenue per click or decrease cost per click. Here's how:
| Strategy | Impact |
|---|---|
| Improve landing page conversion rate | More conversions from same traffic = higher ROAS |
| Increase average order value (AOV) | Upsells, bundles, free shipping thresholds |
| Refine audience targeting | Better targeting = lower CPA = higher ROAS |
| Cut underperforming placements | Eliminate wasted spend on low-converting zones |
| Multi-touch attribution tracking | Know which touchpoints actually drive sales |
| A/B test creatives systematically | Data-driven creative decisions, not guesswork |
| Metric | Formula | Why It Matters |
|---|---|---|
| CPA | Ad Spend / Conversions | How much each conversion costs you |
| EPC | Revenue / Clicks | Earnings per click — compare across campaigns |
| CR% | Conversions / Clicks x 100 | What % of clicks convert into sales |
| AOV | Revenue / Conversions | Average revenue per order |
| Breakeven CPA | AOV - COGS per unit | Max you can pay per conversion and still profit |