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Performance6 min read
How to Calculate ROAS Properly (And Why Most Brands Get It Wrong)
ROAS is the simplest metric in marketing, and the easiest to fool yourself with. Here's how to read it like an operator.
Round Social · 28 May 2026
Return on Ad Spend looks deceptively simple: revenue divided by ad spend. The problem is what counts as revenue, what counts as spend, and how attribution windows quietly inflate the number.
The formula everyone uses
ROAS = Revenue from ads ÷ Ad spend. A 4× ROAS means every AED 1 spent returned AED 4 in revenue. Sounds great, until you back out gross margin.
The formula operators use
Break-even ROAS = 1 ÷ Gross Margin. If your margin is 30%, you need at least a 3.33× ROAS just to not lose money on ads. Anything below that is buying customers at a loss.
Common ways brands fool themselves
- Counting view-through conversions on a 7-day window.
- Ignoring refunds, returns, and chargebacks.
- Not subtracting creative and agency fees from spend.
- Mixing first-purchase and repeat-purchase revenue.
Use our free ROAS Calculator at /tools/roas-calculator to model your true break-even before scaling spend.