Return on Ad Spend Calculator
Find out how much you can afford to spend on ads
The effectiveness of an advertisement hinges on its ability to drive desired actions (e.g., purchases, sign-ups, engagements) at a cost that aligns with your business model.
We've developed two distinct Return on Ad Spend Calculators — a simple version and a more comprehensive one — to assist you in evaluating the effectiveness of your advertising investment.
Simple Return on Ad Spend Calculator
Congratulations! Achieving a ROAS above 400% is a clear indicator of a highly effective marketing strategy, suggesting that your investment in advertising is generating substantial returns.
To see what levers you can pull to drive additional growth, try our Comprehensive ROAS Calculator below.
Comprehensive Return on Ad Spend Calculator
Your budget affords
clicks per month
To get 1 paying customer
You'll need 10 visitors
Your budget is expected to generate
Your average customer value is
Return on Ad Spend
Your budget is expected to generate$100,000.00in revenue
You spend$10,000.00on ads per month
Your return on ad spend is
About this tool
We first created this tool in 2014 and have been refining it as the performance marketing landscape has evolved. One constant concern for many founders and marketing leaders, however, is the risk associated with dependency on paid channels.
It's not unusual to see startups allocating more than 60% of their budget to performance marketing… Diversity, therefore, is key. An over-reliance on holistic paid marketing or on one or two volatile channels can place any business in a precarious position if a channel's ROI suddenly declines or market conditions shift.
That's why we advocate for a more balanced approach, that incorporates multiple channels and tactics - from SEM and paid social to other channels like SEO, content marketing, partnerships, product growth and brand marketing. Plus, it's essential to have a solid operational foundation with efficient marketing and sales tools. This ensures comprehensive reporting and minimizes time spent on low value admin.
A diverse channel mix not only mitigates some risk, it increases your chances of engaging potential customers at different stages of their decision-making journey. Different individuals have varied preferences when it comes to consuming content and making purchasing decisions. Therefore, with a multi-channel approach you're able to meet your audience where they are, maximize your reach, improve sales velocity and ensure your marketing efforts complement your sales process.
The Qwilr Return on Ad Spend Calculator tool supports this moderated approach to performance marketing by ensuring you start with your metrics and cost guardrails. It's a practical way to get perspective and clarity prior to further investment in paid channels. This visibility enables informed decision-making, balanced spending, and ultimately, drives more sustainable growth.
If you'd like to learn more about Qwilr, a great place to get started is checking out our proposal templates or proposal generator. However, if you'd like to dig deeper, visit our homepage to learn more about why Qwilr is one of the most popular sales proposal software options.
Frequently asked questions
ROAS, or Return on Ad Spend, is a marketing metric that measures the efficacy of a digital advertising campaign. It calculates the amount of revenue generated for every dollar spent on advertising.
Essentially, it tells you how many dollars you earn in return for each dollar you spend on your ads. For businesses focused on ad performance, understanding ROAS is crucial to determining the success of their campaigns. Don't forget to use our ad spend calculator above to get a quick and accurate ROAS for your campaigns.
Calculating ROAS is straightforward. Simply divide the revenue generated from your advertising campaign by the total cost of that campaign. If you have the numbers at hand, our ad spend calculator above can do the math for you instantly and provide you with your campaign's ROAS.
The formula for calculating ROAS is: ROAS = (Revenue from Ad Campaign) / (Cost of Ad Campaign). This formula will give you a ratio that indicates the effectiveness of your advertising efforts. A higher ROAS means a more successful advertising campaign.
A "good" ROAS varies depending on industry, market, and the specific goals of your advertising campaign.
For SaaS companies, determining a "good" ROAS can be a bit more complex due to the nature of the business model, which often focuses on long-term customer relationships and recurring revenue. While a general benchmark for a good ROAS in other industries might be 4:1, SaaS companies may aim for a higher ratio due to the lifetime value (LTV) of a customer. It’s not uncommon for successful SaaS businesses to target a ROAS of 5:1 or even higher, especially when factoring in the customer retention rates and the recurring revenue generated from subscriptions.
However, it's crucial for SaaS companies to consider their Customer Acquisition Cost (CAC), LTV, and churn rate alongside ROAS to fully understand the profitability and sustainability of their advertising campaigns. Our ad spend calculator above can help you determine your ROAS, but remember to integrate it with a comprehensive analysis of your SaaS metrics for a complete picture.
ROAS (Return on Ad Spend) and ACoS (Advertising Cost of Sale) are both metrics used in digital advertising, but they focus on different aspects.
ROAS measures the revenue generated per dollar spent on advertising, while ACoS represents the cost of advertising per dollar of revenue earned.
Essentially, ROAS is revenue-oriented, while ACoS is cost-oriented. Understanding both metrics can provide a comprehensive view of your advertising efficiency.
ROAS (Return on Ad Spend) measures the revenue generated per dollar spent on advertising, focusing specifically on the efficacy of advertising campaigns. It's calculated by dividing the revenue from the ad campaign by the cost of the ad campaign.
ROI (Return on Investment), on the other hand, assesses the overall profitability of an investment, considering all associated costs and revenues. It’s a broader metric, applicable to any investment, and is calculated by dividing the net profit by the cost of the investment, then multiplying by 100 to get a percentage.
While ROAS is used to evaluate the success of specific ad campaigns, ROI gives a holistic view of the profitability of broader investments.
ROI (Return on Investment) for ads is calculated by subtracting the cost of the advertising campaign from the profit generated by the campaign, then dividing that number by the cost of the campaign.
The formula is: ROI = (Profit - Cost of Campaign) / Cost of Campaign. This will give you a percentage indicating the profitability of your advertising efforts.
LinkedIn, known for its professional network, tends to have higher advertising costs compared to other social platforms. The platform operates on a bidding system as well. The minimum CPC on LinkedIn is $2.00, but the average ranges from $2.00 to $5.00, with some industries seeing higher average costs. The cost-per-impression (CPM) on LinkedIn typically ranges between $6.59 and $7.91. Due to its professional audience, LinkedIn can be a valuable platform for B2B marketing, which can justify the higher advertising costs for many businesses.
Similar to Instagram, Facebook uses a bidding model for ads. The average CPC for Facebook ads varies by industry, but it typically ranges from $0.45 to $3.77. However, the overall campaign costs can be influenced by your bid strategy, ad quality, and the level of audience targeting you choose.
The cost of Instagram ads operates on a bidding system, similar to Facebook. The average cost-per-click (CPC) for Instagram ads is generally between $0.70 and $1.00. However, costs can go significantly higher, especially in competitive industries. It's also important to note that factors like ad relevance, estimated action rates, and your target audience's potential value can affect the overall cost.
Monthly ad spend refers to the total amount of money a business allocates to its advertising campaigns over the course of a month. This includes all costs associated with running ads, such as bid amounts, ad production, and management fees. Monitoring your monthly ad spend is crucial for maintaining your budget and ensuring your advertising efforts are cost-effective.