Should the revenue I enter for ROAS include VAT or exclude it?
Exclude it. The tax you collect from customers passes through you to the tax authority, so including it inflates both ROAS and estimated profit. What matters most is that every figure sits on the same basis: revenue and margin both before tax. The calculator does not handle tax itself; it works with what you type.
How much tax inflates the result
Say your campaign brought orders totalling 11,500 including VAT, and the rate you apply is 15%. First take the tax out in the VAT calculator, choosing 'Extract tax from a gross amount' at 15: 10,000 before tax and 1,500 of tax. Then enter both cases in the ROAS calculator with 2,000 of spend and a 35% margin:
- With the tax-inclusive 11,500: ROAS 5.75x, ad share 17.39%, estimated profit after ads 2,025.
- With 10,000 before tax: ROAS 5x, ad share 20%, estimated profit 1,500.
The profit gap is 525, which is 35% of the 1,500 of tax. The calculator treated the tax as sales earning your margin, which it is not. Here the campaign is profitable either way, but on a campaign near break-even this difference can be what separates profit from loss.
Where tax-inclusive revenue sneaks in
- Some store reports show the order value as the customer paid it, with tax and sometimes shipping. Check the column name before copying.
- Ad platforms record purchase value as your store's tracking code sends it, which may include tax depending on the setup. Do not assume; compare one order in both sources.
- If you copy revenue from one place and spend from another, one of them is quite possibly on a different basis.
What about margin and spend?
The margin must be on the same basis. Work it out from a tax-inclusive price and it looks smaller than it really is, because part of that price was never yours. Calculate it from the pre-tax price; the Profit margin calculator does this once you have taken the tax out of the price.
For ad spend, enter what the ads actually cost you. If the VAT on the ad invoice is recoverable in your case, the real cost is the amount before it; if not, it is part of the cost. That is a question for your accountant, and the calculator accepts whichever figure you settle on.
One practical rule
Pick one basis and note it next to every calculation: 'excluding tax'. Then stick to it for every campaign and every month. Comparing two campaigns where one used tax-inclusive revenue and the other did not creates an artificial gap that has nothing to do with ad performance.
Common questions
Does the calculator know my country's VAT rate?
No. It does not deal with tax at all. Take the tax out first at the rate you apply, then enter the result.
Should I take shipping out of revenue too?
If the customer pays for shipping and it goes to the courier, it is clearest to leave it out of both revenue and costs. What matters is consistency with your margin.
Does break-even ROAS change with tax?
No, it depends on the margin alone. What changes is your actual ROAS and the estimated profit.