POAS Calculator
ROAS tells you revenue. POAS tells you profit. Plug in your real numbers below.
POAS below 1.0x means paid sales do not cover their ad cost. Figures exclude overheads and do not show incrementality.
How POAS is calculated
POAS = (Net Revenue − COGS − Shipping − Payment Fees) ÷ Ad Spend.
Net Revenue is gross revenue minus the value of returned orders. This is the only ad-efficiency number that actually maps to your P&L. Read the full method on our POAS framework page or compare to POAS vs ROAS.
The five inputs above are the minimum honest version. A full reconciliation would also include inbound freight, packaging, warehouse pick-and-pack, customer service per order and CAC payback period. How close the five-input version gets depends on how large those extra costs are in your business.
Two worked examples
Illustrative numbers, not client data.
- Revenue £100k, ad spend £25k = 4.0x ROAS (looks healthy)
- Return rate 32% → net revenue £68k
- COGS 40% of net = £27.2k; shipping 8% = £5.4k; payment 2.5% = £1.7k
- Contribution before advertising = £33.7k; POAS = 1.35x; about £8.7k left after ad spend
- Verdict: profitable but only just; one bad campaign tips it negative
- Revenue £80k, ad spend £25k = 3.2x ROAS (looks tighter)
- Return rate 5% → net revenue £76k
- COGS 25% of net = £19k; shipping 6% = £4.5k; payment 2.5% = £1.9k
- Contribution before advertising = £50.6k; POAS = 2.02x; about £25.6k left after ad spend
- Verdict: stronger than the fashion brand despite lower headline ROAS
Six mistakes that inflate POAS
- 01Using gross margin from a product spec sheet instead of blended contribution margin
- 02Forgetting to strip returns out of the revenue side of the equation
- 03Counting shipping income but not shipping cost
- 04Excluding payment processor fees (1.5–3% on most UK gateways)
- 05Mixing first-touch and last-click attribution when calculating ad spend
- 06Calculating at account level only - product-level POAS is where the leaks hide
When to use POAS over ROAS
Use POAS when contribution margin varies meaningfully across the catalogue, when returns are a material cost, when you sell own-brand alongside reseller stock, or when finance and marketing report different "ad-driven revenue" numbers at month end.
Stick with ROAS only when the catalogue is genuinely uniform (single-SKU brands, digital products, subscriptions with one price point).
Frequently asked questions
What is POAS?
POAS (Profit on Ad Spend) is contribution before advertising divided by advertising spend. Unlike ROAS, which only measures gross revenue, POAS accounts for COGS, returns, shipping and payment processing fees - the costs that determine whether a sale is actually profitable.
How do you calculate POAS?
POAS = (Net Revenue − COGS − Shipping − Payment Fees) ÷ Ad Spend. Net Revenue is gross revenue minus the value of returned orders. A POAS of 2.0x means every £1 of ad spend returns £2 of contribution before advertising, leaving £1 after the ad cost.
What is a good POAS for ecommerce?
Below 1.0x, paid sales do not cover their ad cost, so contribution after advertising is negative. Above 1.0x, something is left to cover overheads and profit. What counts as good depends on your fixed costs, cash position, growth plans and whether the sales are incremental, so there is no universal target.
POAS vs ROAS - which should I optimise to?
Optimise media bids to POAS, but report ROAS to non-finance stakeholders. ROAS is a directional efficiency metric tied to the ad platform. POAS is the only number that survives a P&L reconciliation. If you optimise to ROAS alone, you will overspend on low-margin SKUs and underspend on high-margin ones.
Can I send POAS back to Google Ads as a bidding signal?
Yes. Feed product-level margin into Google Ads via custom conversion values or the Profit Maximisation beta. The bidder then optimises towards margin rather than revenue. This requires accurate per-SKU COGS data and a reliable feed pipeline, usually via the Merchant Center or a server-side tag.
Why does the dashboard ROAS look fine but my P&L is losing money?
Three common reasons: (1) returns are stripped out of revenue but not out of attributed ROAS, (2) shipping and payment fees are absorbed by finance but ignored by media, (3) attribution windows credit the same order to multiple campaigns. POAS fixes the first two by using your real costs; the third needs reconciliation against your order data, and none of them shows incrementality.
How often should I recalculate POAS?
Monthly at the account level, weekly at the campaign level during peak trading, and per-SKU quarterly when COGS or shipping costs change. Set a calendar reminder after every supplier price change or carrier rate review.
Want this calculated against your real account data?
A profit audit reconciles your Google Ads numbers with your P&L line items, not just the dashboard.
Book a profit audit