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Work out your campaigns' ROAS, then the line below which they lose money: break-even ROAS, max CPA and max CPC, based on your own margin.
The calculator divides ad revenue by ad spend to give your ROAS. From your margin, average order value and conversion rate, it also works out your break-even ROAS, max cost per acquisition and max CPC.
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Take the spend and conversion value for the period from Google Ads (the “Cost” and “Conv. value” columns). Your ROAS shows up right away, as a ratio and a percentage.
Margin is what is left of the sale price once the product or service is paid for, as a percentage. The calculator turns it into your break-even ROAS: below it, every sale costs more than it brings in.
With your average order value you get your max cost per acquisition. With your click conversion rate you get the max CPC your bids should not exceed.
A campaign with a ROAS under the line loses money, even if it brings in sales. Start with the keywords that spend without converting.
ROAS (return on ad spend) measures what each ad dollar brings back: revenue generated ÷ ad spend. A ROAS of 4, or 400%, means $4 in sales for every $1 spent.
Google Ads reports it once you track conversion values (the “Conv. value / cost” column). It is also the goal of the “Target ROAS” bid strategy.
There is no universal “good ROAS”. With a 25% margin you need a ROAS of at least 4 to cover your ads; with a 60% margin, 1.67 is enough. That is why the calculator starts from your margin, not from an industry average.
This line ignores fixed costs and your time: aim higher if the campaign has to cover them too.
Your max cost per acquisition is what you can pay for one sale without losing money: average order value × margin. Max CPC follows from it: if 2 clicks out of 100 buy, you can pay at most 2% of that amount per click.
Use both numbers as ceilings when you set bids or a target CPA.
A weak ROAS often comes from a handful of keywords that attract browsers, students or job seekers. The search terms report analyzer shows which ones cost money without converting.
The surest way to lift ROAS is to stop paying for clicks that cannot buy. Should I Bid reads the Google results page for each keyword and tells you which ones deserve your budget.
Divide the revenue generated by your ads by your ad spend for the same period. $5,000 in sales for $1,250 spent gives a ROAS of 4, or 400%.
Any ROAS above your break-even ROAS, which equals 1 ÷ your gross margin. With a 40% margin, any ROAS above 2.5 brings in more than it costs, before fixed costs.
ROAS compares revenue with ad spend only. ROI compares profit with all your costs. A ROAS of 3 can still mean a negative ROI if your margin is thin.
Multiply your max cost per acquisition (average order value × margin) by your conversion rate. With a $48 max CPA and a 2.5% conversion rate, your max CPC is $1.20.
It depends on your conversion tracking: values sent, attribution model, offline conversions. Check that the tracked value really matches revenue, or the ROAS shown will be wrong.
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