ROAS Calculator

If you want to calculate your Return On Ad Spend (ROAS) with this free online calculator, then RWR offers you the RWR ROAS Calculator. You just have to enter the required data points on the RWR calculator, which is mentioned above. But we will get an instant overview of the ROAS Calculator for you.

What is ROAS? 

ROAS stands for Return On Ad Spend is the amount of revenue a company generates for every INR spent on an advertising source. So it may compare the ROAS at different stages of the campaign with other advertising sources to gauge their performance.

It is a metric that is extremely important to businesses that use paid ads as a strategy since it can help them understand how much return they generate in comparison to how much they spend on ads.

Here you can calculate ROAS, with the ROAS formula which we will discuss later. This formula will help you to determine if you made a profit after deducting your ad spends from the amount you earned. So if you made any money on your ad, you will have a positive percentage, but this does not necessarily mean that you made a profit from your ad.

For example, if you made an INR 40,000 sale on an ad, and you spent INR 50,000 on the ad, your ROAS would be 80.00%. You might be satisfied with that number but in reality, you didn’t make a profit. You lost INR 10,000.

How to calculate ROAS

The formula for calculating ROAS is straightforward so here is the ROAS formula: 

ROAS = (Revenue from advertising/ cost of advertising) x 100

So, that means that if you spent  Rs. 20000 on Meta ads in one month and your revenue for that month is Rs. 1,00,000 your ROAS is,

1,00,000 / 20,000 x 100

5 x 100

500 % per INR spent on advertising

But if you made INR 15,000 in revenue in the same month, then your ROAS is,

15,000 / 20,000 x 100

0.75 x 100

75 %

75% may look acceptable at face value, but don’t be fooled by anyone throwing such an ROAS number, so anything less than 100% is a loss when evaluating ROAS. The ROAS calculator will help you to make sure that you don’t decrypt your ROAS results wrongly or confuse them with your ROI. 

But let us clarify that ROAS is not ROI. ROI gives a more accurate evaluation of your whole business performance, whereas ROAS is restricted to the performance of your ad spend.

What is a good ROAS?

So, let's take our example which we have discussed above, is the ROAS 500% a good return? It depends. So 500% ROAS means that you gained 400% or INR 80,000 from the ad campaign.

But if you have to pay for other expenses such as employee costs and delivery fees or other fees from the INR 80,000, your margin is reduced further. But the different businesses have different objectives for their advertising and marketing campaigns, so most focus on improving the revenue and profit.

That means you need to establish some margin of safety if you want to protect your net profit margin. Well, a good ROAS is attended by profitability after you have accounted for less obvious advertising costs, that is commission, vendor fees, transaction fees, and other business overhead costs.

Well, most businesses, particularly e-commerce businesses are within the profit territory when the ROAS is 800% and above. And if the ROAS is less than 400% it means you need to reevaluate your advertising strategy. 

And if it's within the 400% to 799% range, so you can still be profitable after removing your business operational cost. So just make sure to keep tracking the metric with the ROAS calculator and optimize for opportunities. So which example we have discussed it comes under 400% to 799% so here you can still be profitable.

How to use the ROAS Calculator

Here are instructions on how to use the ROAS calculator:

1. First, you need to Input the ad spend or the funds of an ad sources.
2. Then you have not determined the revenue from your ads, or if you want a ROAS target, then you need to fill in the following box.
3. So here is the ad revenue derived from the ad source to get your ROAS. So if you are wondering how to calculate break-even ROAS which is simply input the 100% in the ROAS filed to get the break-even ad revenue.
4. So to compare your ROI with ROAS, so input your profit margin in the ROI section.

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Factors that influence your ROAS metric 

Here are some factors you must have to know about it:

• The types of advertisement or the ad sources, so if you are using the banner ads, then you may have a low ROAS since the banners are less likely to be clicked, but this will effectively improve your brand's awareness.
• Customer reviews are the most important.
• It also depends on the product prices.
• Your brand popularity is also important, if you are new in a market, and you are likely to have a low ROAS compared to when you have established your brand.
• The product or service images and descriptions are also important.
• The failing campaign, like if you have got the foothold in a new market and your ROAS is below 300%, then review your audience targeting and also optimize your campaign to get the best result from the marketing budget.

Conclusion

In conclusion, here we have mentioned all such details, that you have to know about the ROAS Calculator. And also discusses ROAS, formula, examples, what is a good ROAS, and many more. We hope the given information about the ROAS Calculator is helpful and informative.