Channel ROI Calculator

How the Channel ROI Calculator works

The calculator takes four numbers from one paid channel, ad spend, average order value, purchases and unit product cost, and turns them into the results that matter: cost per purchase, revenue, net profit, ROI and profit per purchase. ROI here is net profit divided by ad spend, so it already accounts for product costs, not just media.

One honest note: the cost figure is per-purchase CPA, ad spend divided by purchases. True customer acquisition cost needs new-customer counts, because repeat buyers make CPA look better than the real cost of winning a new customer.

As a rough read: below 0% ROI the channel loses money, up to 100% you are near break-even, 100% to 300% is a solid paid channel, and above 300% you should be testing more budget.

When to use it

It tells you whether one paid channel makes money after ad spend and product cost, not only whether it brings in revenue. A channel can show a decent ROAS and still lose money once you pay for the products it sold. Run it per channel at month end, or before you move budget from one channel to another.

How to use it

Fill the four fields for one channel and one period. Purchases is the number of orders the channel gets credit for in your attribution setting. COGS per Unit is the product cost of one order, because the calculator counts one order as one unit, so if your average order holds two items, enter the cost of both. Results appear once Ad Spend or Purchases is above zero.

Worked example

Example numbers, not client data: Ad Spend 10,000, AOV 150, Purchases 200 and COGS per Unit 40. Cost per Purchase (CPA) is 10,000 / 200 = 50.00. Revenue is 150 x 200 = 30,000.00. Net Profit is 30,000 minus 10,000 of ads minus 8,000 of product cost (40 x 200), which leaves 12,000.00. ROI is 12,000 / 10,000 = 120.00% and Profit per Purchase is 60.00, so the ROI banner reads Good ROI.

The same numbers give a ROAS of 3.00 (30,000 / 10,000), while ROI is 120% because product cost comes off first. Drop Purchases to 150 and keep everything else, and CPA rises to 66.67, Net Profit falls to 6,500.00 and ROI to 65.00%, which turns the banner amber. Each order leaves 110 after product cost (150 minus 40), so this channel needs 10,000 / 110 = 90.9, about 91 purchases, before it covers its spend.

How to read the result

The ROI tile turns red below 0%, amber from 0% to 100% and green from 100% up. The CPA note turns amber when CPA is higher than AOV and green when CPA is 30% of AOV or less. In the example CPA is 50 against an AOV of 150, about 33%, so neither CPA note appears.

Net Profit on this page covers ad spend and product cost only. Shipping, payment fees, VAT and returns are not in the formula, so your real profit per order is lower. For the full cost of an order, use the Break-even Calculator. Keep spend and purchases on the same date range and attribution window.

Channel ROI Calculator FAQ