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POAS calculator

POAS, profit on ad spend, divides the profit your orders leave, after product cost, payment fees, shipping and returns, by the ad spend that brought them. Break-even is 1.0 whatever your margins, so a POAS of 1.5 means each unit of ads came back with half as much again in profit.

For one campaign, or all of them, over one period.

Orders the ads brought in, returned ones included.

After sales tax or VAT is taken out.

Share of order value, including packaging.

Card and wallet fees, as a share of order value.

What the carrier charges to deliver.

Share of all orders returned for a refund.

What the carrier charges to bring it back.

POAS
1.57x
Reported ROAS
4.00x
Profit after returns, before ads
$7,840
Profit after ads
$2,840
Connect your store and Tera Ads shows your real profit after ads and returnsFree for one business, no card needed.

The formula

  • Margin per order, after returns = kept share × (order value × (1 − product cost − payment fees) − shipping) − return rate × (shipping + return shipping)
  • Profit before ads = orders × margin per order, after returns
  • POAS = profit before ads ÷ ad spend
  • Profit after ads = profit before ads − ad spend

Rates are shares between 0 and 1: 30% is 0.3. Returned products are assumed to go back into stock.

Worked example

$5,000 of ads brings 400 orders at $50 each.

Product cost is 40% of order value and payment fees 2%.

Shipping costs $3 each way, and 20% of orders come back.

The orders leave $7,840 after product cost, fees, shipping and returns, so POAS is 1.57x while Ads Manager shows a ROAS of 4.00x. After the ads, $2,840 is left.

Questions

What is a good POAS?

Anything above 1.0 makes money on the orders the ads brought in; below 1.0 the ads cost more than those orders left. Aim comfortably above 1 to cover fixed costs such as salaries and software, which POAS doesn't include.

How is POAS different from ROAS?

ROAS divides revenue by ad spend, so its break-even point moves with your margins. POAS divides profit by ad spend, so break-even is always 1.0 and products with different margins can be compared directly.

Why start from orders placed, not orders delivered?

Ads Manager counts orders when they're placed, returned ones included, so this starts from the same orders and takes the returns off with your return rate.

Should I enter order value with or without sales tax or VAT?

Use order value after the tax is taken out, because it isn't yours to keep. Counting it makes every ROAS look better than it is. Keep product cost, fees and ad spend on the same basis.

The full guide

POAS (Profit on Ad Spend): The Metric That Replaces ROASPOAS divides the profit an ad brought by what it cost. How to calculate it, why break-even is always 1.0, and why it ranks campaigns differently from ROAS.

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