ROAS (Return on Ad Spend) measures revenue generated per dollar of ad spend, while ROI (Return on Investment) measures actual profit after all costs. For tradies, ROAS can be dangerously misleading because it ignores materials, labour, fuel, agency fees, and overheads. The number you should track is true ROI: profit from marketing-generated jobs divided by total marketing cost.
Your marketing agency sends you a report that says "12x ROAS." Sounds impressive. But what does it actually mean, and should you care?
Here is the short version: ROAS tells you how much revenue your ads generated per dollar of ad spend. ROI tells you whether you actually made money. They are not the same thing, and if you are only looking at one, you might be celebrating a campaign that is quietly losing you money.
What ROAS Is
ROAS stands for Return on Ad Spend. The formula is simple:
ROAS = Revenue from ads / Ad spend
If you spent $1,000 on ads and those ads led to $12,000 in revenue, your ROAS is 12x. Or 1,200%.
Sounds great, right? Your agency will put that in bold on the monthly report. But here is what ROAS does not tell you.
What ROAS Ignores
ROAS only measures ad spend against revenue. It does not account for:
- Materials. That $12,000 job might have $4,000 in materials
- Labour. Your boys do not work for free. Wages, super, insurance
- Fuel and vehicle costs. Running the ute to site every day
- Agency management fees. The $2,000/month you pay the agency does not show up in the ROAS calculation
- Your time. The hours you spend quoting, managing, and closing leads
- Overheads. Rent, insurance, tools, admin, accountant
After you subtract all of those costs from that $12,000 in revenue, you might be left with $3,000 in actual profit. Still a good return on a $1,000 ad spend. But very different from the "12x" number on the report.
What ROI Is
ROI stands for Return on Investment. It measures actual profit against total marketing costs.
ROI = (Profit from marketing - Total marketing cost) / Total marketing cost x 100
Let us run the real numbers:
- Revenue from ads: $12,000
- Materials: $4,000
- Labour: $2,500
- Fuel and overheads: $500
- Profit from the job: $5,000
- Ad spend: $1,000
- Agency fee (monthly, pro-rated): $500
- Total marketing cost: $1,500
ROI = ($5,000 - $1,500) / $1,500 x 100 = 233%
That is a genuine 233% return on your marketing investment. Still strong. But it is a very different story from "12x ROAS." If your agency is only showing you ROAS, you are not getting the full picture.
Why This Matters for Tradies Specifically
In most service businesses, the margin between revenue and profit is thin enough that ROAS can be misleading.
A 5x ROAS on a job with 20% net margin means:
- $5,000 revenue from $1,000 in ads
- $1,000 in actual profit
- After the $1,000 ad spend, you broke even
- After the agency fee, you lost money
That is a campaign with a positive ROAS that is actually costing you money. Your agency is celebrating. Your bank account is not.
For trades, margins vary wildly by job type. According to ABS industry data, typical net margins for Australian trades range from 15% to 70% depending on the service:
- Emergency plumbing repairs: 50% to 70% margin (high, because labour is the main cost)
- Kitchen renovations: 15% to 30% margin (lower, because materials are significant)
- Concreting: 25% to 40% margin
- Landscaping: 20% to 35% margin
The same ROAS number means completely different things depending on your margins. A 5x ROAS is brilliant for a plumber on 60% margins. It is break-even for a renovator on 20%.
The Numbers Tradies Should Actually Track
Forget ROAS. Here are the four numbers that tell you whether your marketing is actually making you money:
1. Cost per qualified lead
How much are you paying for each genuine enquiry? Not every form submission. Qualified enquiries from people who are in your area, need your service, and have a realistic budget. Read our full breakdown of how to calculate your cost per lead and what benchmarks look like by trade.
Benchmark for trades in Australia: $40 to $80 per qualified lead on Meta Ads.
2. Close rate on marketing leads
What percentage of marketing leads turn into booked jobs? This tells you whether the leads are actually good, and whether your follow-up process is working. If your close rate is low, you might have a lead quality problem rather than a volume problem.
Benchmark: 40% to 60% on pre-qualified leads. Below 30% means either the leads are not qualified or your follow-up needs work.
3. Cost per booked job
Total marketing spend divided by number of booked jobs. This is the single most useful number for a tradie evaluating their marketing.
Formula: (Ad spend + agency fees) / Number of booked jobs
Example: ($750 ad spend + $2,000 agency fee) / 8 booked jobs = $344 per booked job
4. Revenue-to-cost ratio (true ROI)
Total profit from marketing-generated jobs divided by total marketing cost.
Formula: Profit from marketing jobs / Total marketing cost
Example: $40,000 profit from 8 jobs / $2,750 total marketing cost = 14.5x return on investment
That is the number that tells you whether to keep investing, invest more, or pull back. Not impressions. Not clicks. Not ROAS. To see what this looks like in practice, check our client results.
How to Track This Without Losing Your Mind
You do not need complicated software. A simple spreadsheet works:
Update it monthly. Takes 15 minutes. After three months, you will have a clear picture of whether your marketing is working.
The critical step most tradies miss: tracking which jobs came from marketing. When a lead calls, note where they came from. "Facebook ad." "Google search." "Referral from Dave." Without this, you cannot calculate any of the numbers above.
If you use a CRM (like GHL), this tracking can be automatic. The lead comes in, the source is tagged, and when you mark it as "booked," the maths does itself.
What to Tell Your Agency
If your agency reports ROAS without context, ask them:
"What is our cost per booked job this month?"
If they can answer that, they are tracking the right things. If they cannot, they are measuring activity, not outcomes. Before your next agency meeting, review our list of questions to ask before hiring a marketing agency.
A good agency should be able to tell you, every month: how many qualified leads came in, how many you booked, what the average cost per booked job was, and how that compares to last month. Everything else is noise. If that sounds like what your current agency is not doing, read what to do when you have hired an agency and got nothing.
Common Questions
What is a good ROAS for tradies?
It depends entirely on your profit margins. For a plumber with 60% margins, a 3x ROAS is profitable. For a renovator on 20% margins, you need at least 6x ROAS just to break even after agency fees. ROAS alone does not tell you whether you are making money.
Should tradies track ROAS or ROI?
Track ROI. ROAS only measures ad spend against revenue and ignores labour, materials, fuel, and agency fees. ROI accounts for all costs and tells you whether your marketing is actually profitable. The four numbers that matter most are cost per qualified lead, close rate, cost per booked job, and true ROI.
How do I calculate ROI on my marketing as a tradie?
Use this formula: ROI = (Profit from marketing jobs minus Total marketing cost) divided by Total marketing cost, times 100. Total marketing cost includes ad spend plus agency fees. Profit means revenue minus materials, labour, fuel, and overheads. Track it monthly in a simple spreadsheet.
Why does my agency only report ROAS and not ROI?
Because ROAS makes the numbers look bigger. A 12x ROAS sounds impressive, but when you subtract materials, labour, and fees, the real return might be 2x to 3x. Ask your agency for cost per booked job each month. If they cannot answer that, they are measuring activity rather than outcomes.