How to calculate ROAS for a Shopify store, with examples
By the AdZoom team · Published
ROAS is the revenue your ads brought in divided by what you spent on them. A campaign that spends $1,000 and brings in $3,000 of revenue has a ROAS of 3.0, because $3,000 ÷ $1,000 = 3.0.
The division is the easy part. A ROAS calculation goes wrong in two other places. One is the revenue you put on top. The other is stopping at ROAS when the question is profit. The three examples below follow one Shopify store through both. To run your own numbers, use the ROAS calculator.
What ROAS is
In marketing, ROAS stands for return on ad spend. It says how many dollars of revenue came back for each dollar spent on ads.
ROAS = revenue from ads ÷ ad spend
The same result is written in other ways too. A ROAS of 3.0 is also 3x or 300%. To get the percentage, multiply by 100.
Google Ads shows the same division as "Conv. value / cost". Google Ads Help describes it as your total conversion value divided by the total cost of all ad interactions.
The formula has no costs in it. ROAS measures revenue, and example 3 carries one campaign on to profit.
Example 1, one campaign
A Shopify store sells yoga mats. In one month its campaign A spent $1,000, and the orders that came from campaign A added up to $3,000.
| Campaign A | Amount |
|---|---|
| Revenue from the campaign | $3,000 |
| Ad spend | $1,000 |
| ROAS | 3.0 |
$3,000 ÷ $1,000 = 3.0. For every dollar the store spent on campaign A, three dollars of revenue came back.
Use the same dates on both sides. A month of ad spend goes with the orders of that same month.
Example 2, three campaigns and one blended ROAS
A blended ROAS is the total revenue of several campaigns divided by their total ad spend. The store ran two more campaigns that month.
| Campaign | Ad spend | Revenue | ROAS |
|---|---|---|---|
| A | $1,000 | $3,000 | 3.0 |
| B | $600 | $4,200 | 7.0 |
| C | $1,400 | $2,100 | 1.5 |
| All three | $3,000 | $9,300 | 3.1 |
Total revenue is $3,000 + $4,200 + $2,100 = $9,300. Total ad spend is $1,000 + $600 + $1,400 = $3,000. The blended ROAS is $9,300 ÷ $3,000 = 3.1.
Don't average the ROAS figures
(3.0 + 7.0 + 1.5) ÷ 3 = 3.83, and 3.83 is wrong. An average gives campaign B's $600 the same weight as campaign C's $1,400. Add up the revenue, add up the ad spend, then divide once.
What the blend hides
Campaign C took $1,400, close to half of the month's ad spend, and brought back $1.50 for each dollar. Campaign B's 7.0 covers for it. Someone who reads only the account's 3.1 sees one number above 3 and never sees campaign C.
So calculate ROAS for each campaign first. The blended figure is a summary, and it can't tell you where to move budget.
Example 3, from ROAS to profit
Profit is the campaign's revenue minus cost of goods, shipping, tax, and the ad spend. The store has to pay for the mats, pay a carrier to ship them, and pass on the tax it collected. Take campaign A again and subtract each one.
| Campaign A | Amount |
|---|---|
| Revenue from the campaign | $3,000 |
| Cost of goods | −$1,400 |
| Shipping | −$350 |
| Tax | −$250 |
| Left after costs | $1,000 |
| Ad spend | −$1,000 |
| Profit | $0 |
The campaign has a ROAS of 3.0 and made nothing. For this store 3.0 is the break-even ROAS, where revenue pays for the costs and the ads and leaves $0. The article on break-even ROAS shows how to find yours, and what is a good ROAS covers how to judge a result against it.
The same steps for all three campaigns
Assume cost of goods, shipping, and tax take the same share of revenue in every campaign. In campaign A that is $2,000 of $3,000, or two thirds. One third is left.
| Campaign | Left after costs | Ad spend | Profit |
|---|---|---|---|
| A | $1,000 | −$1,000 | $0 |
| B | $1,400 | −$600 | $800 |
| C | $700 | −$1,400 | −$700 |
| All three | $3,100 | −$3,000 | $100 |
Campaign B keeps a third of $4,200, which is $1,400. Campaign C keeps a third of $2,100, which is $700.
The account with a blended ROAS of 3.1 made $100 on $3,000 of ad spend. Campaign B earned $800 and campaign C lost $700 of it. Take campaign C out of the table and the month ends at $800.
AdZoom runs this calculation for every Meta and Google Ads campaign, starting from the orders in your Shopify store.
Which revenue goes into the formula
Two different revenue numbers can go on top of the division, and they can give two different ROAS figures. One is the revenue your ad platform reports. The other is the revenue of the orders in Shopify.
The revenue your ad platform reports
Meta and Google Ads each report a ROAS built on their own count of the revenue their ads brought in. In Google Ads that revenue is the conversion value, and your conversion tracking supplies it. Google Ads Help says total conversion value is only useful once a value has been entered for your conversion actions.
The revenue of the orders in Shopify
Shopify counts the orders themselves, and even there "revenue" has more than one figure. Shopify's sales reports define net sales as gross sales minus discounts and sales reversals. Total sales then adds taxes, duties, shipping charges, and fees.
The examples in this article use what customers paid, shipping charges and tax included. That is why tax comes out again on the way to profit. Net sales has no tax in it, so if you start there, don't subtract tax a second time.
Which one to use
The platform's number and Shopify's number can differ. The reasons are a subject of their own, covered in why ad platforms and Shopify report different sales. For the calculation, two rules are enough:
- One source for everything you compare. A ROAS from the platform's revenue and a ROAS from Shopify's orders don't belong in the same table.
- Shopify's orders when you want profit. Cost of goods, shipping, and tax belong to orders. Only revenue that is made of orders can have them subtracted.
The ROAS calculation for your own store
Run these steps for one campaign, then repeat them for the others.
- Pick one campaign and one date range. Use the same range in every step.
- Take the campaign's ad spend for that range from the ad platform.
- Add up the revenue of the orders that came from the campaign. Shopify records the UTM parameters of a shopper's visit on the order, so ads whose links carry their campaign in a UTM parameter can be matched to their orders. See what UTM parameters are and how Shopify uses them.
- Divide the revenue by the ad spend. That is the campaign's ROAS.
- Subtract cost of goods, shipping, and tax, then the ad spend. That is its profit. Cost of goods starts from the cost per item you enter on products and variants in Shopify. Shopify's profit reports count only products that had a cost recorded when they were sold, so fill it in before you rely on the result.
- Add up revenue and ad spend across campaigns for the blended ROAS, and add up the profits for the account.
The ROAS calculator does the division. The Shopify profit calculator does the subtraction in step 5 for one order.