POAS: profit on ad spend, and how to calculate it

POAS (profit on ad spend) is the gross profit from ad-driven sales divided by ad spend. A POAS above 1 means the ads paid for themselves after product costs; below 1 means they lost money. ROAS uses revenue instead of profit, so it can look healthy while margins are thin.

The POAS formula

POAS = gross profit from ad-driven sales ÷ ad spend

Gross profit here is the revenue from those sales minus what the goods cost you. Some teams go further and use contribution margin, which Investopedia describes as the part of sales revenue "that isn't used up by variable costs" (Investopedia). That pulls in shipping, payment fees and other costs that rise with each order. Either works. Pick one and say which you use.

POAS vs ROAS

ROAS is revenue divided by ad spend. Google's help page shows it as "$5 USD in sales ÷ $1 USD in ad spend x 100% = 500% target ROAS" (Google Ads help).

POAS swaps revenue for profit. That's the whole difference, and it matters most when margins vary. One r/ecommerce reply made the point well: if your product costs are roughly the same share across your catalogue, "ROAS and POAS will rank your campaigns almost identically." The same reply went on: "where POAS actually matters is when you have some products at 70% margin and others at 20%." (r/ecommerce, April 2026)

Illustrative example

Round numbers, not a customer. Two campaigns, each spending €4,000 and bringing in €10,000 of sales.

Campaign A: €10,000 revenue at a 60% gross margin is €6,000 of gross profit. On €4,000 of ad spend that's a ROAS of 2.5× and a POAS of 1.5.

Campaign B: €10,000 revenue at a 25% gross margin is €2,500 of gross profit. On the same €4,000 of ad spend that's also a ROAS of 2.5×, but a POAS of 0.63.

Same ROAS. Campaign A made money after product costs. Campaign B lost about €1,500.

POAS and break-even ROAS

POAS of exactly 1 is the same point as break-even ROAS. Break-even ROAS is 1 ÷ gross margin, so at a 25% margin you need a 4× ROAS to cover product costs (Illustrative example). The break-even ROAS calculator works it out from your margin, and the ROAS calculator gives you the ROAS side.

Why the profit needs payment revenue

POAS is only as good as the revenue going into it. If you start from what an ad platform credits to its own ads, refunds and double-claimed sales are still in there.

Practitioners say the same. From an r/FacebookAds thread on thin margins: "Platform ROAS hides the truth, it ignores COGS, shipping, fees, returns". Another reply in the thread: "once we compared actual payments with ad spend on a weekly basis, the margin was way thinner than expected." (r/FacebookAds, January 2026)

So start from payments collected, after refunds, for the same dates as the spend. Our true ROAS guide walks through that step.

Try it in a spreadsheet first

You don't need new software to see whether POAS changes your decisions. For the last full month:

1. List each campaign's spend.

2. Add the revenue from payments for the same dates, per campaign if you can match them.

3. Subtract product costs (or variable costs) to get profit per campaign.

4. Divide by spend and sort.

If the order matches your ROAS ranking, your margins are similar enough that ROAS is doing the job. If it doesn't, POAS is telling you something ROAS can't.

To see how far platform-reported revenue sits from your payments, try the platform vs payment gap calculator.