---
title: "What is POAS? Formula and example | Product Metrics"
description: "POAS measures contribution profit before advertising per euro of ad spend. Learn the formula, what break-even means and how it differs from ROAS."
canonical: "https://www.productmetrics.io/glossary/poas"
pageType: article
language: en
publisher: "Product Metrics"
author: "Berend Vrakking"
datePublished: 2026-10-15
dateModified: 2026-10-15
---

> Content index: https://www.productmetrics.io/llms.txt

# Profit on ad spend (POAS)

Profit on ad spend (POAS) is contribution profit before advertising divided by ad spend.

## Formula

`POAS = contribution profit before ads ÷ ad spend`

Product Metrics uses contribution profit before ads; some sources use gross profit, so compare included costs before comparing POAS. Subtract product and variable order costs from net revenue first. Keep ad spend out of that numerator. A POAS of 1 covers advertising; 2 leaves one euro after ads for each euro spent.

## Example

One product’s advertising:

| Item | Value |
| --- | --- |
| Net revenue | €1,000.00 |
| Product and variable order costs | €600.00 |
| Ad spend | €200.00 |
| POAS (€400.00 ÷ €200.00) | 2 |

ROAS is 5, but POAS is 2. After advertising, €200.00 remains towards overheads and profit. Illustrative data.

## Put it into practice

- [Calculate it: POAS calculator](https://www.productmetrics.io/poas-calculator): Apply the definition to your products.
- [Read the guide: POAS vs ROAS](https://www.productmetrics.io/blog/poas-vs-roas): Work through the concept in more detail.

## For one product, and for an account

Calculate POAS per product with its own costs and attributed ad spend. An account average can hide products whose contribution does not cover advertising. Use a consistent attribution window for revenue and spend.

## Common mistake

Subtracting advertising from contribution profit and then dividing by advertising again changes the metric to ROI on ad spend. Its break-even is 0, whereas POAS breaks even at 1.

## Questions

### Is a POAS of 1 profitable?

A POAS of 1 means contribution profit before advertising exactly equals ad spend, so the sale covers its product costs, variable order costs and advertising. Nothing remains for overheads or a profit target, so most shops need a POAS above 1 to make money overall.

### How does POAS differ from ROAS?

ROAS divides revenue by ad spend, while POAS divides contribution profit before advertising by ad spend. Two products with the same ROAS can have different POAS because their product and order costs differ. POAS therefore shows whether each product’s advertising pays for itself, which ROAS alone cannot show.

## Sources

- [OpenStax: Contribution margin and contribution margin ratio](https://openstax.org/books/principles-managerial-accounting/pages/3-1-explain-contribution-margin-and-calculate-contribution-margin-per-unit-contribution-margin-ratio-and-total-contribution-margin)

## Keep reading

- [ROAS](https://www.productmetrics.io/glossary/roas): The revenue version of the advertising return ratio.
- [Break-even ROAS](https://www.productmetrics.io/glossary/break-even-roas): Translate contribution margin into a revenue threshold.

---

Written by Berend Vrakking, founder of Product Metrics. Last updated 2026-10-15.

HTML version: https://www.productmetrics.io/glossary/poas