Divide 1 by your gross margin (as a decimal). Below this ROAS, you lose money.
60% margin → 1 ÷ 0.60 = 1.67x minimum ROAS
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Frequently Asked Questions
A percentage is a way of expressing a number as a fraction of 100. The word "percent" comes from the Latin per centum
, meaning "by the hundred." So 45% means 45 out of every 100. Percentages make it easy to compare quantities that have different totals — for example, a 30% discount is meaningful regardless of the original price.
Percentage change
measures how much a value has changed relative to a clearly defined starting (original) value — it has a "before" and "after." Percentage difference
compares two values without a defined starting point; it uses their average as the reference. Use percentage change when tracking growth or decline over time; use percentage difference when comparing two peer values where neither is the "original."
Multiply the original price by the discount percentage and divide by 100 to get the saving. Subtract that saving from the original price to get the sale price. Example: $150 at 30% off → saving = 150 × 30 ÷ 100 = $45 → sale price = $150 − $45 = $105. Use the Discount Calculator above to do this instantly.
A percentage point
is the arithmetic difference between two percentages. If interest rates rise from 3% to 5%, that is a 2 percentage point
increase — but a 66.7% relative increase. Mixing these up is a common error in financial and political reporting. When someone says rates "rose by 2%", they almost always mean 2 percentage points.
Yes — percentages over 100% are perfectly valid. They simply mean the value exceeds the reference amount. For example, if sales grow from $50 to $150, that is a 200% increase. There is no mathematical cap on percentages.
To find the whole when you know the part and the percentage, divide the part by the percentage and multiply by 100. Example: 30 is 15% of what number? → (30 ÷ 15) × 100 = 200. Use the "Find the Whole from a Part" calculator in the Basic section above.
Percentages are used constantly: store discounts, sales tax, bank interest rates, restaurant tips, exam scores, investment returns, inflation figures, and nutritional labels all rely on percentages. They provide a standardised way to compare quantities regardless of scale, making them one of the most practical concepts in everyday maths.
ROAS (Return on Ad Spend)
measures revenue generated per dollar of ad spend — it only looks at ad cost versus revenue, ignoring other expenses. ROI (Return on Investment)
accounts for all costs including COGS, agency fees, and overhead, giving a complete picture of profitability. Use ROAS to compare campaigns against each other; use ROI to evaluate whether your overall marketing investment is worthwhile.
A ROAS of 4:1(generating $4 for every $1 spent) is generally considered strong. E-commerce businesses typically aim for 3:1 to 5:1, while SaaS companies may target 5:1 to 10:1. However, what counts as "good" depends entirely on your profit margins — a business with 80% margins can be profitable at 2:1 ROAS, while a 20% margin business needs at least 5:1 just to break even. Use the Break-Even ROAS calculator above to find your specific threshold.
Break-even ROAS is the minimum return on ad spend needed to cover all your costs — below it, every ad dollar loses money. It's calculated as 1 ÷ gross margin. For example, at a 50% margin, your break-even ROAS is 2.0x; at 25% margin, it jumps to 4.0x. Knowing this number prevents you from scaling campaigns that look good on the surface but are actually unprofitable.
CAC is the total cost of acquiring one new customer, calculated as total marketing spend ÷ number of new customers. If you spent $10,000 on ads and gained 200 customers, your CAC is $50. To be profitable, your customer's lifetime value (LTV) must exceed the CAC. A common benchmark is an LTV:CAC ratio of at least 3:1.