Marketing metrics: how to calculate ROAS, CPL and CAC correctly
The key marketing metrics with formula and example: ROAS, break-even ROAS, CPL, CAC, conversion rate and customer value. And which of them counts.
by Florian Hörmann · Managing Director, Strategy and Performance · 5 min read
The key marketing metrics are ROAS, CPL, CAC and conversion rate, and each answers a different question. Which one is your target metric depends on your business model, not on what the ad account shows in the largest font. This article explains each metric with formula and worked example, shows which one fits which business and where the usual calculation errors lie. All figures in the examples are assumed.
In short
- ROAS = revenue from advertising divided by ad spend. It is only profitable above the break-even ROAS.
- CPL = ad spend divided by leads. It says nothing about whether the leads buy.
- CAC = all customer acquisition costs divided by new customers. The most honest number for growth.
- Conversion rate = results divided by visits or clicks. It shows whether the page works.
- One target metric per goal is enough. All the others are there for troubleshooting.
The metrics with formula
| Metric | Formula | Example (assumed) | Answers the question |
|---|---|---|---|
| ROAS | Revenue from advertising / ad spend | 8,000 / 2,000 = 4 | How much revenue does one advertising euro bring? |
| Break-even ROAS | 1 / margin | 1 / 0.25 = 4 | From which ROAS do I stop losing money? |
| Blended ROAS | Total revenue / all ad spend | 30,000 / 6,000 = 5 | What does advertising bring overall, across all channels? |
| CPL | Ad spend / leads | 2,000 / 80 = €25 | What does an enquiry cost? |
| Cost per qualified lead | Ad spend / qualified leads | 2,000 / 40 = €50 | What does a usable enquiry cost? |
| CAC | All acquisition costs / new customers | 5,000 / 20 = €250 | What does a new customer really cost? |
| Conversion rate | Results / visits | 80 / 2,000 = 4% | How well does the page turn visits into results? |
| CPM | Ad spend / impressions x 1,000 | 2,000 / 400,000 x 1,000 = €5 | What does reach cost? |
With ROAS, it pays to take a second look at revenue. Are you counting gross or net, before or after returns? Calculate ROAS on the same basis as the margin, otherwise you are comparing two different things. Run the numbers with your own figures in the ROAS calculator.
ROAS and break-even ROAS
ROAS alone does not tell you whether you are making money. A ROAS of 4 is comfortable at a 50% margin and a loss at a 20% margin. That is why every ROAS target needs a break-even ROAS: 1 divided by the margin after variable costs such as cost of goods, shipping and payment fees.
Two adjustments make the threshold more realistic:
- Factor in returns: if 20% of orders are returned, only the revenue you keep counts.
- Take repeat purchases into account: if a new customer buys twice on average in the first year, you can spend more on the first purchase, provided you have the cash flow for it.
Why the ROAS in the ad account is often higher than in the shop is explained in the article Increasing ROAS without more budget: every platform attributes purchases to itself, and some count twice.
CPL, qualified leads and CAC
For enquiries, CPL is the first number an ad account shows, and the most dangerous one. A cheap lead who cannot be reached or cannot buy is expensive. That is why we separate three stages:
- CPL: every enquiry that comes in through the form.
- Cost per qualified lead: only enquiries that fit your offer after review. You define what counts as qualified before launch.
- CAC: cost per closed deal, including agency, creatives and tools, not just media.
If qualified leads and closed deals are sent back from the CRM to Meta and Google, the platforms optimise for these stages instead of for someone merely filling in a form. How this works is described in the article Sending leads back to Meta and Google.
Which metric fits which business
| Business model | Target metric | Cross-check |
|---|---|---|
| Online shop | ROAS or contribution margin per advertising euro | Blended ROAS in the shop, share of new customers |
| Property developers and real estate | Cost per qualified enquiry or per viewing | Reservations and sales from ads |
| Employers and recruiting | Cost per hire | Cost per suitable application, reachability |
| B2B SaaS | Cost per qualified demo, CAC | CAC relative to customer value |
| Finance and issuers | Cost per qualified investor contact | Data quality, compliance with advertising rules |
There are separate articles for recruiting and finance: Recruiting metrics and Metrics in financial marketing. In financial marketing, metrics describe the quality of the contacts, never an outcome for investors.
Five calculation errors we often see
- Platform ROAS instead of shop revenue: Meta and Google each count the same order for themselves.
- Brand searches in the average: cheap searches for the company name flatter ROAS and CPL.
- Gross against net: revenue with tax, margin without tax, and the threshold is already wrong.
- Too short a period: a week with ten purchases says little. Evaluate over a period with enough results.
- Forgetting the surcharge: for ads in Austria, Google and Meta charge an extra 5%, and that belongs in the ad spend. Details in the article What does Google Ads cost?.
How we work with metrics at ad.boutique
At ad.boutique, we agree a metric before launch, such as cost per qualified enquiry or ROAS, and calculate it with the results that reach you, not with the platform's figures alone. Your target metric is visible in the live dashboard from day one, with a source for every number. How we then steer campaigns is on the page Performance marketing agency in Vienna and Zurich. Where your marketing stands overall is shown by the free online marketing check.
ad.boutique is a performance marketing agency in Vienna and Zurich. If you want to go through your metrics with us, book an intro call.
Frequently asked questions
How do you calculate ROAS?
ROAS is revenue from advertising divided by ad spend. If €1,000 in ad spend brings €4,000 in revenue, the ROAS is 4, often also written as 400%. Whether that is profitable only shows when you compare it with the break-even ROAS, i.e. 1 divided by the margin.
What is the difference between CPL and CAC?
CPL is the cost per lead, i.e. per enquiry or contact. CAC is the cost per new customer won and includes all acquisition costs, not just advertising. Many cheap leads that do not buy add up to a high CAC.
What is a good ROAS?
A good ROAS is above your break-even ROAS; there is no general number. At a 25% margin the threshold is 4, at a 50% margin it is 2. If you have returns or calculate new customers over several purchases, adjust the threshold accordingly.
Which marketing metric is the most important?
The most important metric is the one closest to the business result that you can measure reliably. For shops, that is usually revenue or contribution margin per advertising euro; for enquiries, the cost per qualified enquiry or per closed deal. Clicks and reach only help with troubleshooting.
About the author
Florian Hörmann
Managing Director, Strategy and Performance
Leads strategy and performance marketing at ad.boutique: KPI before launch, campaigns on Meta and Google, reporting from day one.
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