True ROAS after returns calculator

True ROAS counts only the revenue you keep. Meta and Google count every order the moment it's placed, and a refund weeks later never comes off their ROAS, so Ads Manager shows more than reaches your bank. Return shipping and returned stock you can't sell again cost you on top.

True ROAS: 3.40x
Reported ROAS: 4.00x
Orders returned: 60 (15%)
Sales kept: $17,000
Cost of returns: $720

Connect your store and Tera Ads shows your real profit after ads and returnsFree for one business, no card needed.

The formula

Orders returned = orders × return rate
Reported ROAS = orders × average order value ÷ ad spend
True ROAS = revenue from orders kept ÷ ad spend
Cost of returns = orders returned × (return shipping + share you can't resell × product cost per order)

Rates are shares between 0 and 1: 30% is 0.3. The cost of returns counts return shipping and the product cost of items you can't sell again.

Worked example

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

15% are returned for a refund, and 1 in 5 returned items can't be sold again.

A return label costs $8, and product cost is 40% of order value.

60 orders are refunded, so $17,000 of sales is kept. Ads Manager shows a ROAS of 4.00x, but true ROAS is 3.40x, and the returns cost another $720 in shipping and stock.

Questions

Why is true ROAS lower than the ROAS in Ads Manager?

Meta and Google record the purchase value when the order is placed. When the order is refunded later, neither takes it back out, so their ROAS keeps revenue you have already given back.

Which orders should I use for the return rate?

Orders older than your return window, so every return that will happen has happened. With a 30-day window and a week or two of shipping, that means orders from about six weeks ago or more.

Should exchanges count as returns?

No. An exchange keeps the sale, so leave it out of the return rate. Count only its extra shipping, if you pay for it.

Does this include payment fees on refunds?

No. Some payment providers keep their processing fee when you refund an order. If yours does, add that fee for each refunded order to the return label cost.

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

True ROAS After Refunds and Returns: What Ads Manager Leaves InMeta and Google count a sale when it's placed, so refunds and returns never leave their ROAS. How to work out true ROAS after returns, with a worked USD example.