Profit on Ad Spend

Q: How do you calculate POAS?

POAS = (Ad Revenue − Product Costs of Those Sales) / Ad Spend

How much gross profit your ads bring in for every dollar they cost: the profit left on the sales after product costs, divided by ad spend.

2 min readLast updated Nov 2026

Reviewed by Golden Digital·Operator-reviewed ecommerce reference

Formula

POAS=(Ad Revenue − Product Costs of Those Sales)/Ad Spend

Example: POAS = ($4,000 − $2,400) / $1,000 = 1.6

Use our free ROAS Calculator to see the profit your ads leave after product costs.

Why It Matters

Two products can share the same ROAS and earn very different profit, because one has a 70% margin and the other 30%. POAS puts margin into the number, so a campaign that looks strong on ROAS but sells your thinnest-margin products shows up for what it is. It is also the simplest way to compare campaigns that sell different things.

Formula

POAS=(Ad Revenue − Product Costs of Those Sales)/Ad Spend

Example: POAS = ($4,000 − $2,400) / $1,000 = 1.6

Practical Example

Scenario

A campaign spends $1,000 and brings in $4,000 in sales. The products in those orders cost you $2,400 to make, pack and ship.

Calculation

POAS = ($4,000 − $2,400) / $1,000 = 1.6

Result

ROAS reads 4x, which sounds great. POAS reads 1.6: the ads covered their own cost and left $600 of gross profit toward overhead. A second campaign at the same 4x ROAS selling 30%-margin products would sit at a POAS of 1.2.

In-Depth Explanation

Return on ad spend (ROAS) counts revenue. Profit on ad spend (POAS) counts what is left of that revenue once you pay for the products you sold, so it answers the question ROAS only hints at: did these ads make money? A POAS of 1.0 is break-even on the first order. Above 1.0 the ads paid for themselves and left gross profit over.

Pro Tips

1POAS = ROAS × gross margin. If you know your margin, you can turn any ROAS into POAS in your head.
2Count shipping, packaging and payment fees in product costs, or POAS will read higher than the money you actually keep.
3Use it to rank campaigns and products against each other, then judge the winners on repeat purchases too.

Common Mistakes to Avoid

Treating a POAS of 1.0 as a win. It means the ads only paid for themselves; overhead and profit still have to come from somewhere.

Using one store-wide margin for every campaign when the products in them carry very different margins.

Comparing your POAS with someone else's ROAS target. They measure different things, so the numbers are not on the same scale.

Frequently asked questions

ROAS divides ad revenue by ad spend. POAS divides the gross profit on that revenue by ad spend. At a 50% margin, a 3x ROAS is a POAS of 1.5. ROAS tells you how much the ads sold; POAS tells you how much of it you kept.

A POAS of 1.0 means the gross profit on the sales exactly covers the ad spend. That is the same line as break-even ROAS, written in profit instead of revenue: at a 40% margin, a POAS of 1.0 equals a ROAS of 2.5x.

Put it to work

Related Terms

Return On Ad SpendROAS

The revenue generated for every dollar spent on advertising.

Break-Even ROAS

The lowest return on ad spend (ROAS) at which your ads pay for the product costs of the sales they bring in, so you neither make nor lose money on the first order.

Gross Margin

The percentage of revenue remaining after subtracting the cost of goods sold (COGS).

Contribution MarginCM

The profit earned on each unit sold after deducting all variable costs.

Marketing Efficiency RatioMER

Total revenue divided by total marketing spend, providing a holistic view of marketing efficiency.

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