Marketing ROI calculator
Marketing ROI is the return on what you spent: (revenue minus cost) divided by cost. A 200% ROI means three dollars back for every one in. But ROI on revenue ignores margin, so it flatters. Solve it any way and see what it equals as a ROAS.
Using typical funnel assumptions, to show that the metric above can’t tell you if you’re winning. Your real numbers live in the full calculator.
Drop in one product and the Target ROAS calculator works your whole P&L backwards to the number that actually decides it, free, no signup.
What is marketing ROI?
Marketing ROI is the profit you earn for every dollar of marketing spend, as a percentage. The catch is which profit you measure. Most reported ROI uses revenue and quietly ignores the cost of goods, which makes weak campaigns look strong.
How to calculate marketing ROI
A 3x revenue ROAS sounds healthy, but at a 25% margin it returns only about $0.75 of gross profit per $1 spent, before overhead. That is a loss dressed as a win. Always run ROI on gross profit, not revenue.
How to improve marketing ROI
- Protect margin first; ROI is profit-based, so a wider margin lifts it directly.
- Cut waste in the funnel: better targeting, creative and landing pages raise return per dollar.
- Measure against your break-even, not a flat multiple. See the Target ROAS calculator for the number that actually decides profit.
The operator’s playbook
How a paid-media operator reads this number, not a glossary definition.
Revenue ROI vs profit ROI+
Most marketing ROI numbers divide revenue by cost, which ignores the cost of the goods you sold. A 3x revenue ROAS at a 25% margin is barely break-even. For a true read, use gross profit in the numerator, not revenue.
Attribution makes ROI soft+
ROI is only as honest as the attribution behind the revenue. Platform-claimed revenue inflates it. Pressure-test with a holdout or geo test before you trust a big ROI number.
Frequently asked questions
How do you calculate marketing ROI?
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(Revenue from marketing minus marketing cost) divided by cost, times 100. $30,000 from $10,000 is a 200% ROI. This tool also solves for the revenue or cost behind a target ROI.
What is a good marketing ROI?
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It depends on margin. A common rule is 5:1 revenue-to-cost, but at a thin margin even that loses money. Judge on profit, not revenue.
What is the difference between ROI and ROAS?
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ROAS is revenue divided by ad spend. ROI is profit relative to spend. A 3x ROAS can still be a negative ROI once you subtract the cost of goods.
How do I calculate ROI on profit, not revenue?
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Use gross profit in the formula: (gross profit from marketing minus marketing cost) divided by marketing cost. That reflects what you actually keep.
Why does a high ROAS not always mean a good ROI?
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Because ROAS ignores cost of goods. At a 25% margin, a 3x ROAS returns only about $0.75 of gross profit per dollar spent, a loss before overhead.
Built by Yehonatan Tav, paid media for ecommerce brands spending $50k to $500k a month. Figures are illustrative; run the logic on your own numbers.