ROAS vs profit: what remains after advertising

When this helps

An advertising dashboard shows an attractive return. Before increasing the budget, you want to see what is left after fulfilling orders and paying the sales fee. Keep the revenue and its costs in the same note rather than judging the campaign by ROAS alone.

How to calculate it

1. Divide attributed revenue by ad spend to calculate ROAS as a multiple.
2. Calculate the fee as a share of revenue.
3. Subtract variable costs, fees and ad spend from revenue to find the contribution left to cover fixed costs.

Inputs and formulas

Copy these lines into Sumico or use the interactive example below. Decimal values in expressions use a dot.

# ROAS and contribution
revenue = $12000
ads = $3000
costs = $7000
fee = 5%

ROAS: revenue / ads
fees = revenue * fee
Left after ads: revenue - costs - fees - ads

Read the result

ROAS is 4x, or 400% if expressed as a percentage. The sales fee is $600. Contribution after advertising is $1,400. That amount still needs to cover fixed overhead and any other excluded costs.

The calculation in Sumico

Change an assumption

Change costs = $7000 to costs = $9000. ROAS stays at 4x because revenue and ad spend have not changed, but contribution falls to -$600. A high revenue multiple can coexist with a loss on these costs.

Assumptions and limits

This example uses attributed revenue and a single proportional fee. It excludes fixed overhead, taxes, refunds and costs not entered in the note. The result is contribution after advertising, not accounting net profit. Attribution and the reporting period must be consistent. ROAS is undefined at zero ad spend.

A common question

Does ROAS above 1 mean the campaign is profitable?

No. ROAS above 1 means attributed revenue exceeds advertising spend. Profitability also depends on fulfilment, fees and the other costs of running the business.