ROAS Calculator: How Much Should You Spend on Paid Advertising?

Introduction: Stop Guessing Your Ad Budgets

We regularly talk to Indian SMB owners who start advertising by putting a random amount—say, ₹10,000—into their ad accounts, hoping for the best. When that budget runs out with mixed results, they assume “ads don’t work for my industry.”

Paid advertising is not a lottery; it is a math formula. In this guide, we break down the exact formulas to calculate your Return on Ad Spend (ROAS) and structure your monthly daily budget.

1. What is ROAS? The Core Formula

ROAS stands for Return on Ad Spend. It measures the gross revenue generated for every single rupee you spend on advertising.

$$\text{ROAS} = \frac{\text{Gross Revenue Generated from Ads}}{\text{Total Ad Spend}}$$

• Example: If you spend ₹10,000 on Meta Ads and generate ₹40,000 in sales, your ROAS is: $$\text{ROAS} = \frac{40,000}{10,000} = 4.0 \text{ (or } 400% \text{)}$$

2. Calculating Your Break-Even ROAS

Before launching campaigns, you must know your break-even point. This depends on your product margins.

$$\text{Break-Even ROAS} = \frac{1}{\text{Profit Margin %}}$$

• Scenario: If your business operates on a 25% profit margin (product cost is ₹75, profit is ₹25), your break-even ROAS is: $$\text{Break-Even ROAS} = \frac{1}{0.25} = 4.0$$ This means if your ads deliver less than a 4.0 ROAS, you are actually losing money once product costs are factored in.

3. Average ROAS Benchmarks in India (2025)

• Real Estate Lead Gen: 4.0X to 8.0X (High average contract value).
• E-Commerce Brands: 2.5X to 4.0X (Lower margins, high volume).
• Local Services (Clinics/Salons): 3.5X to 5.0X (High lifetime customer value).

Optimize Your Ad Math

Don’t run ads in the dark. Use our proven performance retaining frameworks to hit your target metrics. Book a Free 15-Minute Audit with RoasBodhi to calculate your exact marketing scaling limits.