POAS calculator
Profit on Ad Spend. The number Smart Bidding should compound, not gross ROAS.
Inputs
Results
Gross profit = Revenue × Gross margin
What's left after COGS and direct variable costs.
POAS = Gross profit / Ad spend
Above 1.0 you're making money on the ads. Below 1.0 the ads are subsidising the brand.
ROAS = Revenue / Ad spend
What the Google Ads dashboard reports.
Why this calculator is verified
POAS is the metric Google's Smart Bidding optimises against when you set conversion values that reflect product margin instead of gross revenue. The formula is identity-true: profit divided by spend is by definition the return on the spend at the margin level. Andrew Faris (4x400) popularised the term in DTC; Google's own value-rules documentation is the authoritative spec for how to feed margin-aware values to the bidder.
Worked example
Skincare brand, $100K revenue, 35% margin, $25K spend
Gross profit = $100,000 × 0.35 = $35,000. POAS = $35,000 / $25,000 = 1.40. Above 1.0, so the ads are profitable. Dashboard ROAS reads 4.0 (100/25). Two-thirds of that ROAS is COGS, not margin. POAS is the honest number.
Sources for the formula
- Google Ads, value rules and conversion adjustments
How to feed margin-aware conversion values to Smart Bidding so it optimises POAS instead of gross ROAS.
- Google Ads, Smart Bidding overview
The bid strategies (tROAS, Maximize Conversion Value) that consume the value signal.
- Andrew Faris (4x400), why POAS beats ROAS
Operator primer. Worth reading once for the framing, even though the math is identity-true.
Related on Ad-Lab
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