Free tool
POAS calculator
ROAS counts revenue. It ignores your margin. Drop in your numbers to see your real profit on ad spend - the figure your P&L actually feels.
Your costs (% of revenue)
Contribution margin: 46%
Profit on ad spend (POAS)
Profitable spend
- Profit per £1 spent
- £0.84
- ROAS
- 4.00×
- Break-even ROAS
- 2.17×
- Profit after ad spend
- £8,400
The POAS formula
POAS = (revenue − COGS − shipping − returns) ÷ ad spend. It strips your costs out of revenue to leave contribution margin, then measures how much of that profit each pound of ad spend returns. A glossy ROAS can hide a thin margin; POAS surfaces it. The calculator also shows your break-even ROAS - the point below which ads lose money.
The same 3× ROAS, five very different businesses
This is why profit on ad spend exists. Here is what a reported 3.0× ROAS actually earns at different contribution margins:
| Contribution margin | POAS at 3.0× ROAS | Verdict |
|---|---|---|
| 20% | 0.60× | Loss - a "3× ROAS" is quietly underwater |
| 30% | 0.90× | Loss - close, but still paying to sell |
| 40% | 1.20× | Profit - £0.20 kept per £1 of spend |
| 50% | 1.50× | Profit - healthy headroom to scale |
| 60% | 1.80× | Profit - strong; most working ads make money |
Why POAS falls as you scale spend - and when to stop
Higher ad spend almost always means lower POAS. Your first pounds of budget reach the people most likely to buy; every extra pound reaches colder, more expensive audiences, so revenue per pound falls while your costs per order do not. Falling blended POAS is not a reason to panic - it is the price of growth. The number that should gate your scaling is marginal POAS: does the last increment of spend still return more than a pound of profit per pound spent? Keep scaling while it does; ease off when it does not. Judging spend increases on blended POAS alone will make you stop scaling too early.
Frequently asked questions
What is POAS?
POAS (Profit on Ad Spend) is your contribution margin - revenue after COGS, shipping and returns - divided by ad spend. Where ROAS measures revenue per pound of spend, POAS measures the profit you actually keep. A POAS above 1.0 means each pound of ad spend returns more than a pound of profit.
What is the POAS formula?
POAS = (revenue − COGS − shipping − returns) ÷ ad spend. For example, £40,000 revenue at a 46% contribution margin is £18,400 of profit; on £10,000 ad spend that is a POAS of 1.84× - so each £1 of spend returns £0.84 of profit, even though the ROAS is 4.0×.
What is a good POAS?
A POAS above 1.0 is profitable; below 1.0 you lose money on ads. Most well-run ecommerce accounts target somewhere in the 1.3×-2.0×+ range depending on margin and growth goals. The right number depends on your contribution margin - use the break-even ROAS this tool shows to find your floor.
POAS vs ROAS - what is the difference?
ROAS counts revenue and ignores your margin, so a high ROAS can still be a loss. POAS counts profit. A 5× ROAS on a 20% margin product barely breaks even, while a 3× ROAS on a 60% margin product genuinely makes money. POAS tells you which.
Why does POAS drop when ad spend increases?
Marginal efficiency. Your first pounds of spend reach the cheapest, most likely buyers; each extra pound reaches colder, more expensive ones, so revenue per pound falls while your margin per order stays the same. That is normal - the question is not "is POAS falling?" but "is marginal POAS still above 1.0?". Scale until the last pound of spend stops returning a pound of profit, not until blended POAS looks worse.
Can I use POAS for Google Ads and other PPC channels?
Yes - POAS is channel-agnostic. It works for Meta, Google Ads, TikTok or any PPC channel: divide the contribution margin of attributed sales by that channel’s spend. Google Ads users can go further by sending margin-adjusted conversion values, so Smart Bidding optimises toward profit instead of revenue.
Want the full argument for running your account on profit instead of revenue? Read our POAS vs ROAS guide. Profit is only half the picture - your stock position is the other half, covered in inventory-aware advertising. Then blend the whole account with the MER calculator, or check the glossary for every metric explained.