ROAS is the most misunderstood marketing metric in home services. A contractor sees a 4x return in their Google Ads dashboard, celebrates, and months later cannot work out why the books do not add up. The problem is not the ROAS: it is that they never calculated their break-even ROAS. Without that reference number, any multiple looks good.
This calculator gives you that number. Adjust your gross margin above and you will see, in real time, the exact ROAS below which every dollar spent on ads loses money.
How to read the results
- Break-even ROAS is the headline figure: the revenue multiple per dollar of ad spend at which you neither make nor lose money. Below it, you run at a loss.
- Revenue per $1 of ad spend is the same break-even expressed in money: how much you have to bring in per dollar spent just to break even.
- Break-even revenue/month projects that ROAS onto your monthly spend: the total sales you need to generate to avoid losing money at your current budget.
- Target ROAS raises the bar to the net margin you want to earn, and target revenue/month translates it into dollars.
Break-even depends only on your margin
Here is the idea that changes everything: your break-even ROAS has nothing to do with the industry average, your competitors, or what some marketing guru says. It depends on one thing, your gross margin, and the relationship is inverse:
- 50% margin -> 2x break-even ROAS
- 40% margin -> 2.5x break-even ROAS
- 33% margin -> 3x break-even ROAS
- 25% margin -> 4x break-even ROAS
- 20% margin -> 5x break-even ROAS
The thinner your margin, the higher your ROAS has to be for advertising to be worth it. A remodeling firm on tight margins needs a much higher ROAS than a high-ticket emergency service. It is not that one is a better advertiser; it is pure margin arithmetic.
Margin is not markup (and this costs money)
The most expensive mistake when calculating break-even is confusing margin with markup. Margin is profit as a percentage of the selling price. Markup is the surcharge as a percentage of cost. They are not the same:
- A 50% markup on cost equals a 33% margin.
- A 100% markup equals a 50% margin.
If you calculate your break-even ROAS using markup, you err in the dangerous direction: you think your break-even is lower than it really is, and you call campaigns profitable that are actually losing. This calculator always works with gross margin on the sale, which is the correct figure. If you only know your markup, convert it before entering it.
Why most contractors track ROAS backwards
Three mistakes show up in almost every account in the trade:
- Comparing to someone else's average. "A good ROAS is 4x" means nothing without your margin. For a contractor at a 20% margin, 4x is just breaking even; for one at 50%, 4x is excellent.
- Confusing revenue with profit. ROAS measures revenue per dollar spent, not profit. A high ROAS at a low margin can still be a losing operation once you subtract materials, labor, and the ad itself.
- Not subtracting the cost of the work. Measuring ROAS on total revenue without removing what it costs to do the job the ad generated inflates the number and hides the truth.
The fix is not to chase a higher ROAS in the abstract, but to know your break-even and always measure against it. A 3x ROAS is a success or a failure depending on where your break-even sits.
What to do with the number
If your break-even surprised you, the next step is to structure campaigns around it: pause what sits below it, scale what beats the target, and watch the margin on the work each ad generates. The conversion page and the Google Ads guide for home services explain how to put this into practice. You will find the rest of the calculators in the tools index, and if you want us to review your real numbers, talk to us.