Anything above 1 makes money after ads. Many stores target 1.2 to 2 on prospecting and higher on retargeting and brand campaigns.

Is POAS better than ROAS?

For a store, yes: ROAS ignores margins, so it can reward campaigns that sell low-margin products. POAS measures what you actually keep.

What costs should POAS include?

Product cost, shipping and fulfillment, payment fees and returns for the orders the ads brought. Fixed costs like salaries and rent stay out.

POAS calculator

POAS (profit on ad spend) tells you how much profit each dollar of advertising brings back. Above 1, your ads make money; below 1, they lose it, whatever the ROAS says.

Ad spend

Revenue from ads (without tax)

Product cost of those orders

Shipping, payment fees and returns

POAS1.40x

ROAS4.00x

Gross profit$3,500.00

Net profit after ads$1,000.00

Every $1 of ads brings back $1.40 of profit.

How to calculate POAS

POAS = gross profit from the ads ÷ ad spend, where gross profit is revenue (without tax) minus product cost and the variable costs of those orders: shipping, payment fees and returns.

A POAS of 1 is break-even: the ads pay for themselves and nothing more. 1.5 means $1.50 of profit for every $1 of ads, so $0.50 of net profit after the ads.

Example

$10,000 of revenue from $2,500 of ads is a 4x ROAS. With $5,000 of product cost and $1,500 of shipping and fees, the gross profit is $3,500 and the POAS is 1.4: the ads made $1,000 of net profit.

Bidding on profit

Google Ads and Meta optimize for whatever value you send them as the conversion. Send revenue and they chase revenue; send the profit of each order and they chase profit. That is POAS bidding, and it is what savvy.so sets up automatically for Shopify stores.

Go deeper in the guide POAS (profit on ad spend): formula and targets.