How to Calculate Google Ads ROI (With a Worked Example)

The short answer

Google Ads ROI is (revenue from ads minus total cost) divided by total cost. Total cost means ad spend plus management fees. For lead-based businesses, work backwards: cost per lead, then lead-to-customer rate, then average customer value. Break-even ROAS equals 1 divided by your profit margin.

The formulas you need

• ROI = (revenue from ads - total cost) / total cost. Total cost = ad spend + management fee.
• ROAS (return on ad spend) = revenue from ads / ad spend.
• Cost per lead (CPL) = ad spend / number of leads.
• Cost per customer (CPA) = ad spend / number of new customers.
• Break-even ROAS = 1 / profit margin. A 25% margin needs a ROAS of 4 to break even on ad spend.

A worked example (illustrative numbers)

These numbers are an example only, not a promise or a client result. A clinic spends 1,000 on ads and pays 300 in management in a month, so total cost is 1,300.

• Ads produce 40 enquiries, so cost per lead is 1,000 / 40 = 25.
• 10 of those enquiries become paying patients, a 25% conversion rate, so cost per customer is 1,000 / 10 = 100.
• Each patient is worth 300 in revenue on the first visit, so revenue is 3,000.
• ROAS = 3,000 / 1,000 = 3.
• ROI = (3,000 - 1,300) / 1,300 = about 131%.

If the average patient returns, lifetime value is higher than 300 and the true ROI is better than the first-visit calculation shows.

For businesses without online checkout

If you sell through calls, WhatsApp or appointments, Google Ads cannot see the sale unless you tell it. Track calls, forms and WhatsApp clicks as conversions, then record which leads became customers and what they paid. Without that last step you only know cost per lead, not ROI.

Common mistakes that distort ROI

• Counting clicks or impressions as results instead of enquiries and sales.
• Ignoring management fees and tools in total cost.
• Not separating new customers from repeat customers who would have bought anyway.
• Leaving out follow-up speed: slow replies waste good leads and make ads look worse than they are.
• Judging too early, before the campaign has gathered enough data.
• Using revenue instead of profit when deciding what ROAS you need.

Use the calculators

Try our free cost per lead calculator and budget calculator, and see how long Google Ads takes to work before judging results.

Frequently asked questions

What is a good ROI for Google Ads?

It depends on your margins and customer value. Work out your break-even ROAS first, then aim above it. There is no universal good number.

What is the difference between ROI and ROAS?

ROAS compares revenue to ad spend only. ROI compares profit to total cost, including management fees and other costs.

How do I track phone calls and WhatsApp as conversions?

Set up call tracking and conversion events for call and WhatsApp clicks, and import offline results such as sales from your CRM where possible.

Should I include management fees in ROI?

Yes. They are part of the real cost of running the campaigns.

How many leads do I need for reliable numbers?

As a rough guide, at least a few dozen leads per month gives a more reliable cost per lead than a handful, but lower volumes still help you spot obvious problems.

Sources

• Google Ads Help: conversion tracking and conversion value.
• Standard definitions of ROI, ROAS and CPA used in digital advertising.
• The example in this guide uses illustrative numbers and is not a client result.