Target ROAS Calculator
Use the target ROAS calculator to turn contribution margin and desired profit margin into an advertising target and optional target CPA.
The target ROAS calculator sets the revenue each advertising dollar should return to preserve your 15.0% profit goal.
How the target ROAS calculator works
The target ROAS calculator protects a selected profit margin instead of allowing advertising to consume the entire contribution margin.
100 ÷ (Contribution Margin % − Desired Profit Margin %)A 45% contribution margin minus a 15% profit goal leaves 30% of revenue for ads. 100 ÷ 30 = 3.33x target ROAS.
Contribution margin
Use the margin after variable order costs and before ads. If you only know selling price and costs, the BEROAS calculator calculates this percentage for you.
Desired profit margin
This is the share of revenue you want left after ad spend. The target ROAS calculator shows an error when the goal leaves no room to acquire a customer.
Target ROAS is not a universal benchmark
The target ROAS calculator gives two products different targets because margin determines how much revenue can fund ads. Recalculate when price, shipping, discounts, payment mix, or COGS changes.
Target ROAS calculator questions
How is target ROAS calculated?
Subtract desired profit margin from contribution margin percentage. That difference is the revenue share available for ads. Divide 100 by that percentage to get target ROAS.
Why is target ROAS higher than break-even ROAS?
Break-even uses all contribution margin for advertising and leaves zero profit. A target reserves some margin as profit, leaving less revenue available for ad spend and requiring a higher ROAS.
What contribution margin should I enter?
Use margin after product cost, shipping, fulfillment, payment fees, platform fees, and other per-order variable costs, but before advertising.
Can desired profit exceed contribution margin?
No profitable ad budget remains when desired profit equals or exceeds contribution margin. Reduce the profit goal or improve the underlying product margin.
Can a target ROAS calculator guarantee profit?
No. A target ROAS calculator estimates a goal from the inputs. Refunds, taxes, overhead, attribution errors, and changing costs can alter actual profit.