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Covering the ad cost is not enough: what ROAS do I need to keep 10% of revenue as profit after ads?

Subtract the profit share you want from your margin before ads; what is left is the most the ads may take out of revenue. With a 40% margin and a 10% target, ads get 30%, so the ROAS you need is 1 ÷ 0.30, about 3.33x. The 2.5x break-even figure is the floor, not the place to stop.

Published · 3 min read

Break-even is not a target

When you enter your margin in the ROAS calculator, it shows the break-even ROAS. At exactly that point your gross profit covers the ad cost and nothing is left. Useful for knowing when you lose money, but useless as a goal: a campaign running at break-even uses your time and stock and adds nothing to your earnings.

A practical goal sounds more like: after ads, I want a certain share of sales left as profit. The maths for that is direct:

  1. Allowed ad share = margin before ads − target profit share. That is 40% − 10% = 30%.
  2. Target ROAS = 1 ÷ allowed ad share. That is 1 ÷ 0.30 ≈ 3.33x.
  3. Compare: break-even ROAS at a 40% margin is 1 ÷ 0.40 = 2.5x.

Checking the target in the calculator

The tool has no target field, but the 'Estimated profit after ads' line is enough to check. Use 1,000 in revenue so the share is easy to read:

  • Spend 300 at a 40% margin: ROAS 3.33x, ad share 30%, estimated profit after ads 100, exactly 10% of revenue. That is your target.
  • Spend 250: ROAS 4x and estimated profit 150, or 15%. Above target.
  • Spend 400: ROAS 2.5x, and the calculator says ROAS equals break-even with zero profit.

In all three cases the calculator tells you whether you are above or at break-even and says nothing about your target. 'Above break-even' means there is some profit, not that it is enough. So read the estimated profit figure and divide it by revenue yourself.

How to pick the profit share to aim for

There is no correct number for everyone, but one point helps. Profit after ads in this calculator does not cover fixed costs such as rent, salaries or your platform subscription; those are paid out of it. To find how much you need to sell to cover them in the first place, use the Break-even calculator, then set an ad target that contributes to that.

And the target depends on the margin. At a 25% margin with a 10% profit target, ads may take only 15%, so the ROAS you need is about 6.67x. Sometimes improving the margin, which you can model in the Profit margin calculator, is easier than chasing a high ROAS.

Limits of this calculation

  • It assumes the margin holds across all attributed sales.
  • The attributed revenue comes from your source, and the calculator does not verify it.
  • A target guarantees nothing. It is the bar you measure a campaign against once it has run, not a forecast.

Common questions

Why not just add the profit share to the break-even ROAS?

Because the relationship is not additive. You subtract the share from the margin, then divide 1 by the result. At a 40% margin, break-even is 2.5x and the target for 10% profit is 3.33x, not 2.6x.

Is the target a share of revenue or of spend?

In this method it is a share of revenue, because the margin itself is a share of revenue.

Does the calculator save my target?

No, and there is no field for it. It calculates in your browser from what you enter.