POAS Course Part #7: POAS After Refunds Example
POAS gives you a clearer view of profitability than ROAS, but even POAS can mislead you if you’re not accounting for returns and refunds.
This example with three products shows exactly why.
The Example
All three products (A, B, C) have:
- Sale price: $100
- Ad spend: $20
- ROAS: 5
But once you factor in COGS + fees:
- A & B: $40
- C: $60
This gives:
- POAS (A & B): 3
- POAS (C): 2
So far, A and B look stronger than C.
Where POAS After Refunds Changes Everything
Product B was refunded, meaning:
- All revenue reversed
- All profit reversed
- POAS After Refunds = 0
This means:
- Product B becomes less profitable than Product C, even though C had worse margins on paper.
- Refunds completely wipe out performance if you’re only looking at standard POAS or ROAS.
Why This Matters
- ROAS hides profitability.
- POAS shows profit, but still hides the financial impact of refunds.
- POAS After Refunds gives you the true profitability picture, especially in industries with high return rates.
How to Use It
- High return rates? Optimize for POAS After Refunds directly in Google.
- Low return rates? Report on it to monitor spikes, trends, and profit fluctuations.
Whether you optimize toward it or simply track it, profit after refunds is essential for making decisions that protect your bottom line.
