The short answer
Refund-adjusted ROAS uses attributed revenue after the refunds included in your reporting definition. Check whether the original export already contains those adjustments. Subtracting the same refund or discount twice understates revenue.
Build a revenue bridge
| Line | Amount | Treatment |
|---|---|---|
| Item sales before discounts | $6,000 | Starting total |
| Discounts | $500 | Subtract only if absent from the starting total |
| Revenue after discounts | $5,500 | 6,000 − 500 |
| Completed refunds | $700 | Subtract once |
| Adjusted revenue | $4,800 | 5,500 − 700 |
| Advertising spend | $1,200 | Same acquisition scope |
Before-refund ROAS on the discounted revenue is $5,500 ÷ $1,200 ≈ 4.58×. Adjusted ROAS is $4,800 ÷ $1,200 = 4×. If your source already reports $4,800 net revenue, use that amount; another $700 deduction would be incorrect.
Choose order-cohort or calendar reporting
An order-cohort report assigns later refunds back to the original orders and associated advertising. A calendar-period view records refunds when they occur, which can include orders acquired in earlier periods. Both can be useful, but they answer different questions. Do not compare one method this week with another last week.
Separate actual refunds from expected returns
Recent orders have had less time to be returned. Label incomplete periods as provisional. If you estimate future returns from mature comparable cohorts, keep that estimate in a separate reserve column and replace it as actual outcomes arrive. An assumption is not a recorded refund.
Correct the cost model too
A refund may return inventory to stock, but may leave payment charges, outbound shipping, return shipping or handling costs unrecovered. Record the actual economic effects. Removing all costs simply because revenue was reversed can overstate contribution.
Reconcile before changing campaign settings
- Export order identifiers, original eligible revenue, discount status and refund amounts.
- Confirm which adjustments already appear in the advertising or analytics export.
- Choose the date basis and one currency conversion policy.
- Preserve the original total and show each adjustment explicitly.
- Calculate the revised ratio and separately update contribution.
A lower adjusted ROAS may reveal a reporting correction rather than a sudden change in ad quality. Annotate the change. For orders that never completed, use the cancellation reconciliation; for estimated future refunds, use the returns reserve model.
Next reading
Examples are illustrative, not client results or benchmarks. The calculations use the inputs shown; real-world decisions depend on your records and assumptions. Report a correction.