Profit on Ad Spend (POAS) Calculator

How to calculate Profit on Ad Spend (POAS)?

POAS measures gross profit generated for every dollar spent on ads. Unlike ROAS, which focuses purely on revenue, POAS ensures you are looking at the actual profit left over after product costs are covered.

POAS = (Revenue × Gross Margin %) / Ad Spend

Using the POAS calculator: an example

Consider a campaign with $10,000 in Revenue, a 40% Gross Margin, and $2,000 in Ad Spend.

Step-by-step calculation:

1. Calculate Gross Profit: $10,000 × 0.40 = $4,000
2. Divide Gross Profit by Ad Spend: $4,000 / $2,000
3. Resulting in a POAS of 2.0

Frequently Asked Questions

What is a good POAS?
A POAS > 1.0 is technically profitable, but most businesses aim for 2.0+ to cover other costs like labor and shipping.

How is POAS different from ROAS?
ROAS only looks at revenue, while POAS accounts for the cost of goods sold, providing a more accurate measure of bottom-line health.

Why should I use POAS?
It prevents scaling campaigns that look successful on revenue but actually lose money after product costs are factored in.