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Paid Media

POAS Calculator — Profit on Ad Spend

ROAS tells you what the ads sold. POAS tells you what they earned — the gross profit each ad dollar returns once product costs come out.

POAS — profit on ad spend0.00POAS = (revenue − cost of goods) ÷ ad spend

Why a good ROAS can still lose money

A 4× ROAS sounds healthy until the product carries a 20% margin: every $4 of revenue produces $0.80 of gross profit against $1 of ad spend. The account is scaling and losing money at the same time. POAS makes that visible on the first line of the report instead of the last line of the P&L.

If you only have ROAS today, the ROAS calculator has a break-even mode that does the same check from a margin percentage.

Getting cost data into the ad account

POAS is easy to calculate and hard to optimize for, because ad platforms only see revenue. Bidding on profit means sending each conversion’s gross profit instead of its revenue as the conversion value — from the store, the payment processor or the CRM. That is an automation problem more than a media one: once a workflow attaches margin to each order, the platform can bid on it.

What POAS does not include

Overheads, salaries, returns that happen after the window, and the future value of a customer who comes back. A POAS below 1.0 on a first order can still be a good investment if the customer is worth far more over time — which is a LTV:CAC question, not a POAS one.

Process

How to calculate POAS

  1. Take the revenue the campaign produced

    Use the same attribution window you use for ROAS, so the two numbers describe the same sales.

  2. Subtract the cost of those sales

    Cost of goods, fulfilment and payment fees for the orders — the costs that grow with each sale. What remains is gross profit.

  3. Divide gross profit by ad spend

    POAS = (revenue − cost of goods) ÷ ad spend. $24,000 in sales costing $14,400 to fulfil, bought with $6,000 of ads, is a POAS of 1.6.

  4. Compare against 1.0

    Below 1.0 the ads cost more than the margin they produced. Above it, the surplus is what is left to cover overheads and profit.

FAQ

Frequently asked questions

  • What is POAS?

    Profit on ad spend: the gross profit a campaign produced for every dollar spent on ads. Where ROAS divides revenue by spend, POAS divides revenue minus the cost of goods, so it measures what the ads actually earned rather than what they sold.

  • How do you calculate POAS?

    POAS = (revenue − cost of goods sold) ÷ ad spend. $24,000 in revenue with $14,400 in product costs and $6,000 in ad spend gives $9,600 of gross profit, and a POAS of 1.6.

  • What is a good POAS?

    Above 1.0 is the floor: at exactly 1.0, each ad dollar returns one dollar of margin and nothing is left for overheads. How far above 1.0 you need depends on fixed costs and whether you value repeat purchases — a business with strong retention can accept a lower first-order POAS than one that sells once.

  • POAS vs ROAS: which should I optimize for?

    POAS, when margins vary across products. ROAS treats a dollar of a 70%-margin product and a dollar of a 15%-margin product as equal, so a ROAS-optimized account drifts toward whatever sells easily, not whatever earns. POAS = ROAS × gross margin, so the two agree only when margin is constant.

  • Is POAS the same as break-even ROAS?

    No, but they are linked. Break-even ROAS is the ROAS at which POAS equals exactly 1.0: 1 ÷ gross margin. At a 40% margin, break-even ROAS is 2.5×. The calculator shows both.

  • Some tools define POAS as net profit ÷ spend. Which is right?

    Both are in use. This calculator uses gross profit ÷ ad spend, which puts break-even at 1.0 and makes POAS a drop-in replacement for ROAS in bidding. The net version subtracts ad spend first, so its break-even is 0; the two always differ by exactly one.

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Formula and benchmarks last reviewed by the Refinity.io team.