# ROAS vs ROI

> ROAS divides ad revenue by ad spend. ROI divides profit by cost. The formulas, a rupee example, and why a ROAS of 3 can lose money.
- **Author**: Marxx
- **Published**: 2026-11-12
- **Category**: Metrics
- **URL**: https://marxx.ai/library-compare/roas-vs-roi

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ROAS tells you how much revenue each rupee of ad spend brought in. ROI tells you how much profit you made compared with what you put in. ROAS ignores your costs, so a ROAS of 3 can still lose money. Use ROAS to steer ads each day. Use ROI to judge if the business made money.

## Side by side

| | ROAS | ROI |
|---|---|---|
| Full name | Return on ad spend | Return on investment |
| Formula | Revenue from ads / ad spend | Net profit / cost, as a percentage |
| Counts product costs? | No | Yes |
| Shown as | A ratio, such as 3.0 | A percentage, such as 50% |
| Where you see it | Ads Manager, Google Ads | Your accounts, not the ad platform |
| Answers | Are my ads bringing in sales? | Did this make money? |

ROI has more than one definition. Some teams divide by ad spend only. Others divide by all costs. Pick one, write it down and use it every time.

## How they connect

If you take ROI as profit after product costs and ad spend, divided by ad spend, one line links the two:

ROI = ROAS x gross margin - 1

Gross margin is the share of each sale left after product costs.

## A worked example

Say you spend INR 1,00,000 on ads and Ads Manager reports INR 3,00,000 in sales.

- ROAS = 3,00,000 / 1,00,000 = **3.0**
- Say product, packing and shipping cost INR 1,50,000. Your gross margin is 50%.
- Profit = 3,00,000 - 1,50,000 - 1,00,000 = INR 50,000
- ROI = 50,000 / 1,00,000 = **50%**

Check with the line above: 3.0 x 0.50 - 1 = 0.50, or 50%.

Now say another brand also gets a ROAS of 3.0, but its margin is 30%.

- Product costs = 70% of INR 3,00,000 = INR 2,10,000
- Profit = 3,00,000 - 2,10,000 - 1,00,000 = -INR 10,000
- ROI = -10,000 / 1,00,000 = **-10%**

| ROAS | ROI at 50% margin | ROI at 30% margin |
|---|---|---|
| 2.0 | 0% | -40% |
| 3.0 | 50% | -10% |
| 4.0 | 100% | 20% |

Same ROAS, different result. The first brand breaks even at ROAS 2.0. The second needs ROAS 3.33. That break-even point is your [break-even ROAS](/glossary/break-even-roas).

## What each one misses

- **ROAS** misses costs and repeat buyers. A first order at ROAS 1.5 can still be a good deal if that customer buys again.
- **ROI** is slow. You can only work it out once costs are known, and it is hard to read per ad.
- **Both** count sales the ads may not have caused. See [incrementality](/glossary/incrementality).

If double-counting across platforms worries you, compare [ROAS vs MER](/compare/roas-vs-mer). For profit per ad rupee, see [POAS](/glossary/poas). To run the numbers yourself, use the [ROAS calculator](/roas-calculator).

## FAQ

### Is a ROAS of 3 good?

It depends on your margin. At a 50% margin, 3.0 makes a 50% ROI. At a 30% margin, it loses money. Work out your break-even first.

### Which should I report to my boss or client?

Both. ROAS shows ad performance fast. ROI shows if the work paid off. Say which ROI formula you use.

### Can ROI be negative while ROAS looks fine?

Yes. A ROAS of 3.0 at a 30% margin gives an ROI of -10% in the example above.

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