Discount-Adjusted ROAS

Metric

Discount-adjusted ROAS computes return on net realised revenue and true variable costs during promotional periods, then sets the result against the post-sale demand hole — pricing a sale instead of just recording its revenue.

Layman Explanation & Analogy

A 20%-off sale does not cost 20% of profit — fixed-per-box costs mean it typically removes 30–40% of contribution per order, borrows next month's demand, and teaches customers to wait. Adjusted ROAS counts all three costs.

Mathematical Formula

Discount-adjusted ROAS = Net realised revenue / Ad spend, with breakeven recomputed at promo margin; Net lift = promo surplus - post-sale hole

Worked real-world example

A festive sale shows 6x revenue ROAS; on promo margins the breakeven floor rose from 2.33x to 3.08x, the post-sale hole erased most of the surplus, and true net lift was a fraction of the headline — plus newly acquired customers, the one durable win.

What people get wrong & common traps

Reports that cannot split promo vs non-promo orders make every sale look free — the order-level promo flag is the prerequisite. And full-price conversion decay (the anchoring cost) never appears in any window analysis; track it semi-annually or strategic discounting drifts into permanent margin erosion.

Related terms