How to Calculate ROI, ROMI and ROAS: Formulas, Examples and Free Calculators

400% ROAS. It looks like a great result: every dollar spent on ads brought back four. But if your margin is 20%, that campaign is losing money. $5,000 of ad spend produced $20,000 in sales, which left $4,000 of gross profit. You are $1,000 down, and the ad platform will never tell you.

ROAS, ROMI and ROI answer three different questions, and mixing them up is one of the most expensive mistakes we see in ad accounts. Below: what each metric means, the exact formulas, worked examples and five free calculators you can use right on this page.

ROAS, ROMI and ROI side by side

ROAS: return on ad spend

ROAS is the metric ad platforms show by default, because they know your ad spend and, if tracking is set up, the revenue attached to conversions.

ROAS = revenue from ads ÷ ad spend
Example: $20,000 ÷ $5,000 = 4.0 (or 400%)

ROAS alone says nothing about profit. The number that turns it into a decision is break-even ROAS:

Break-even ROAS = 1 ÷ gross margin
Margin 50% → 2.0x    Margin 30% → 3.33x    Margin 20% → 5.0x

If your actual ROAS is above break-even, the campaign earns gross profit. If it is below, every sale loses money, however good the ROAS looks.

ROMI: return on marketing investment

ROMI goes one step further. It uses gross profit instead of revenue and counts every marketing cost, not just the ad budget: agency or freelancer fees, creative production, tools and call tracking.

ROMI = (gross profit from marketing - marketing costs) ÷ marketing costs × 100%
Example: gross profit $6,000, marketing costs $6,300
ROMI = ($6,000 - $6,300) ÷ $6,300 = -5%

That example is the same 4x ROAS campaign from above at a 30% margin. ROAS says 400%. Once a $1,000 management fee and $300 of tools are added, ROMI is negative. This is the conversation most businesses never have with their agency.

ROI: return on investment

ROI is the widest view. It includes everything spent to earn the revenue: cost of goods, marketing, staff time, rent, software, delivery. Owners and investors use it to decide whether a project, a product line or a whole business is worth continuing.

ROI = (revenue - all costs) ÷ all costs × 100%
Example: revenue $20,000, all costs $19,800
ROI = $200 ÷ $19,800 = 1%

Lead generation: when the ad platform does not know your revenue

Plumbers, lawyers, clinics, contractors and B2B companies do not sell inside the ad platform. Google and Meta see a click and maybe a form or a call, but not whether that lead became a paying customer. Here you build ROAS and ROMI from the funnel: click price, lead rate, close rate and average deal value.

Clicks = budget ÷ CPC
Leads = clicks × conversion rate
Customers = leads × close rate
Revenue = customers × average deal value
Cost per lead = budget ÷ leads    Customer acquisition cost = budget ÷ customers

Typical click prices by niche are in our guides for plumbers, roofers, HVAC, contractors and real estate agents, and across countries in Google Ads cost per click by country.

Break-even: the most you can pay for a click

Work backwards from your margin and you get the ceiling for every stage of the funnel. Above it, you lose money on every customer.

Max cost per customer = average deal × margin
Max cost per lead = max cost per customer × close rate
Max CPC = max cost per lead × click to lead rate

Seven mistakes that make these numbers lie

1. Revenue instead of profit. ROAS without margin is a vanity metric. Always compare it with break-even ROAS.
2. Forgetting returns, refunds and cancellations. Ad platforms count the sale at checkout. If 15% of orders come back, your real ROAS is lower.
3. Counting the same sale twice. Google, Meta and your email tool can all claim the same order. Add up what every platform reports and compare it with actual sales in your store or CRM.
4. Broken conversion tracking. Duplicate or fake conversions inflate ROAS. In audits this is one of the most common problems we find, see why conversion tracking breaks.
5. Ignoring hidden marketing costs. Agency fees, freelancers, creative, call tracking and software belong in ROMI.
6. Judging too early. Long sales cycles (B2B, real estate, renovation) need lead quality data from the CRM, which takes weeks. Import closed deals back into Google Ads, see enhanced conversions for leads.
7. Ignoring repeat purchases. A first order can lose money and the customer can still be very profitable over a year. If you know customer lifetime value, use it instead of the first order value.

FAQ

What is a good ROAS?

One that is above your break-even ROAS, which is 1 ÷ gross margin. At a 50% margin anything above 2x earns gross profit. At 25% you need more than 4x. There is no universal "good" number without your margin.

What is the difference between ROI and ROMI?

ROMI counts only marketing costs against the gross profit marketing brought. ROI counts all costs of the business or project, including staff and overhead.

How do you calculate ROMI?

ROMI = (gross profit from marketing - marketing costs) ÷ marketing costs × 100%. Gross profit is revenue minus the cost of goods or services.

Can a campaign with ROAS below 1 be worth it?

Sometimes, if it brings new customers who buy again and their lifetime value covers the cost. Without repeat purchases, ROAS below 1 means you lose money on ad spend alone.

Is ROAS the same as ROI?

No. ROAS uses revenue and only ad spend. ROI uses profit and all costs. A 400% ROAS can mean a negative ROI.

Not sure what your real ROMI is, or whether your agency's ROAS numbers can be trusted? A Google Ads audit checks conversion tracking, duplicate sales and wasted spend, and shows what your ads actually earn.