1. Calculating ROAS with Profit Margins in Mind

The standard ROAS formula is simple:

Standard ROAS=Revenue Ads/Cost of Ads

​For example, if you spend $1,000 on an advertising campaign and it generates $5,000 in revenue, your ROAS would = 5.
This means that for every dollar spent on ads, you’re earning $5 in revenue.

But this only tells you how much revenue your ads are generating, not how much actual profit. To get a clearer picture of your marketing’s real impact, you need to calculate Profit-Adjusted ROAS:

Profit-Adjusted ROAS=(Revenue from Ads)×Profit Margin /Cost of Ads = 2

​So, instead of simply seeing a ROAS of $5, you see the actual profit as 2, which means you’re getting $2 in profit for every $1 spent.

Example:

Let’s say you spend $1,000 on an ad campaign that brings in $5,000 worth of deep cleaning services, and your profit margin for  cleaning is 40%. Using the profit-adjusted ROAS formula:

Revenue =5,000 × 40% = 2,000{Profit}

Instead of thinking your campaign yielded 5 dollars for every 1 dollar spent (based on revenue), you can now see that in profit terms, it’s actually only 2 dollars for every dollar spent.

Why It Matters: By applying profit-adjusted ROAS, you’ll make more informed decisions about which services to promote and where to allocate your marketing budget for the best return.

Pro Tip: For a deeper dive into calculating marketing ROI and understanding the true impact of your ad spend, check out our guide on how to calculate marketing ROI for your cleaning business.

2. Real-Life Implications of Profit-Adjusted ROAS

Allocating Ad Spend Wisely:

Understanding profit-adjusted ROAS helps you see which services are actually the most profitable to market. Higher-margin services, like deep cleaning or specialized commercial contracts, are more lucrative for your ad dollars compared to low-margin services, such as basic janitorial work.

• High-Margin Services: Focus your ad spend on high-margin services to improve profitability. Even if they bring in fewer clients, they’ll yield more profit per dollar spent.
• Low-Margin Services: While essential, lower-margin services may not justify as much marketing spend unless they bring in consistent, high-volume contracts.

Example: If deep cleaning services have a higher profit margin than standard office cleaning, directing more marketing dollars toward deep cleaning will improve your profit-adjusted ROAS, yielding higher returns.

Need help optimizing your ad spend? Check out our guide on the best Google Ads strategies for cleaning services to make sure you’re getting the most out of every dollar spent.

3. Segmenting ROAS by Service

Create a Service-Specific ROAS Dashboard:

Segmenting your ROAS by individual service gives you a detailed view of how each type of cleaning service performs. For example, if carpet cleaning has a better profit-adjusted ROAS than residential cleaning, you’ll know to scale up marketing efforts for carpet cleaning.

This segmentation ensures that your ad dollars are focused on the services that bring in the most profit rather than just the most revenue.

Track and Adjust Marketing Efforts:

Instead of looking at ROAS as a whole, break it down by service type. This way, you can adjust your marketing spend to target higher-margin services and make more profit overall.

Looking to boost your profitability through smarter systems? Check out our article on why cleaning services need a CRM for profitability insights for more ways to maximize your return.