ROAS tells you how much revenue you earned for each dollar of ad spend, but it does not by itself tell you whether you made money. Use this calculator to see revenue minus ad spend, ROAS, profit after related costs, and a clear verdict on ad spend alone.
Worked example
Ad spend $500, revenue $1,500, and related costs $200: revenue minus ad spend is $1,500 minus $500, which is $1,000. ROAS is $1,500 divided by $500, which is 3.00x. Profit after related costs is $1,500 minus $500 minus $200, which is $800. The verdict is profitable on ad spend alone, because revenue is higher than ad spend.
A warning about ROAS alone
Suppose revenue is $600, ad spend is $500, and product and delivery costs are $300. ROAS is 1.20x, which sounds positive, but profit after all costs is $600 minus $500 minus $300, which is negative $200. Always check both numbers. Related reading: budget planning and conversion tracking.