ROAS vs ROI: same inputs, different answers

ROAS divides the conversion value an ad platform credits to a campaign by what the campaign cost. ROI takes the gain after costs and divides it by a cost base, and more than one base is in use. So the same orders can give a ROAS that looks fine and an ROI below zero. For illustration: €1,000 of ad spend credited with €3,000 of revenue is a ROAS of 3,000 / 1,000 = 3.0, but if product, shipping, fees and refunds take 70% of each euro, the campaign keeps €900 before ad spend and loses €100 after it.

What do ROAS and ROI each divide?

ROAS is conversion value over cost. Google Ads Help states a target ROAS as a percentage: "$5 USD in sales ÷ $1 USD in ad spend x 100% = 500% target ROAS" (Google Ads Help, 30 September 2026). The "value" is whatever you pass to the platform, and Google's bidding help says it can be "sales revenue or profit margins", so a ROAS built on revenue and one built on profit share a name and differ as numbers.

ROI has no single formula. A finance training reference, the Corporate Finance Institute, gives two common versions: net income over the cost of investment, and investment gain over an investment base. It adds that when someone quotes a good or bad ROI, you should ask exactly how they measure it. Google's own glossary divides by "overall costs", and its worked example counts product cost plus ad cost.

Do the two disagree on the same orders?

They do, and Google's own help pages supply the numbers. The ROI glossary example sells 6 products for $1200 in total, with $600 of product cost and $200 of Google Ads cost, and gives an ROI of 50% (Google Ads Help, 30 September 2026). For illustration, the ROAS arithmetic above applied to that campaign is $1200 / $200 = 6.0, or 600%. Same orders, two answers, and both are right for what they measure.

How can a good ROAS come with a negative ROI?

ROAS stops at revenue, so it can't see what an order cost you to fulfil. The missing piece is contribution margin, the share of each euro of revenue left after the costs that scale with an order. OpenStax, an open accounting textbook, defines total contribution margin as "the total amount by which total sales exceed total variable costs". With that margin, two formulas follow:

ROI on ad spend  = ROAS x margin - 1
Break-even ROAS  = 1 / margin

Refunds belong in those costs. NRF and Happy Returns, a UPS company, ran two surveys in summer 2025, one of 358 ecommerce professionals at large US merchants (over $500 million in revenue). Their report estimates that 19.3% of online sales will be returned in 2025 (NRF, 15 October 2025). That is a large-merchant figure, so use your own return rate.

For illustration, the campaign from the top of this page, line by line (not a benchmark):

Ad spend                                  1,000
Revenue the platform credits              3,000    ROAS = 3,000 / 1,000 = 3.0
Product, shipping, fees, refunds (70%)    2,100
Left before ad spend (30%)                  900
Profit after ad spend                      -100

ROI on ad spend    = -100 / 1,000 = -10%
ROI on total cost  = -100 / 3,100 = -3.2%   (total cost = 2,100 + 1,000)
Break-even ROAS    = 1 / 0.30 = 3.33

Both ROI figures are negative and they don't match each other. Pick one base, write it down and keep using it.

Where is each one used?

ROAS is a number ad platforms bid against. Google's Target ROAS strategy, for one, sets bids "to maximize your conversion value, while trying to achieve an average return on ad spend (ROAS) equal to your target". Its conversion-value page says to use conversion value per cost to "identify keywords, ad groups, and campaigns that show a high or low return on investment", and it calls the "Conversion value/cost" column a way to track ROI, which is how two metrics end up with one name. That makes ROAS the right tool for ordering your own ads inside one platform. ROI is what finance asks for: did the spend pay for itself after what the orders cost.

How do you recompute one campaign's ROI?

Use a complete week that ended at least five days ago, because Google says modelled conversions can take up to 5 days to stabilise in its reporting (Google Ads Help, 30 September 2026). Then:

1. Write down the campaign's ad spend and the revenue the platform credits. ROAS is the second divided by the first.
2. From Shopify and your cost sheet, list what the same orders cost: product cost, shipping and packing, payment fees and refunds. Add them up as a share of revenue. One minus that share is your contribution margin.
3. Put both into the formulas above and note which ROI base you chose.

Pass: ROAS is above the break-even ROAS, so the orders the platform credits cover their costs. Fail: it is below. The break-even ROAS calculator and the contribution margin calculator do the division.

Neither number says whether the ads caused those orders. Each platform counts inside its own window, and Google Ads defaults to 30 days after a click and 1 day after a view for a new conversion action (Google Ads Help, 30 September 2026), so credited revenue from several platforms can add up to more than your store took. ROAS, MER or contribution margin: which to trust covers that, and Ad campaign ROI: the arithmetic from spend to profit walks from spend to profit with a Shopify reconciliation.

Sources, 30 September 2026: Return on investment (ROI) (Google Ads Help, Google, 2026); About Target ROAS bidding (Google Ads Help, Google, 2026); About conversion values (Google Ads Help, Google, 2026); About modeled online conversions (Google Ads Help, Google, 2026); About conversion windows (Google Ads Help, Google, 2026); Return on Investment: Formula, Meaning, and How to Calculate It (Corporate Finance Institute, 2020); 3.1 Explain Contribution Margin (OpenStax, 2019); Consumers Expected to Return Nearly $850 Billion in Merchandise in 2025 (NRF, 2025). The worked numbers are arithmetic on assumed costs, not a benchmark.

Related answers

• ROAS, MER or contribution margin: which to trust
• Ad campaign ROI: the arithmetic from spend to profit
• Return on ad spend (ROAS)
• Marketing ROI
• Break-even ROAS and CPA calculator