Most brands judge their Amazon ads by ACOS alone. But 30% ACOS can be excellent for one product and a loss on another. The number that tells you which is your break-even ACOS.
What break-even ACOS means
Break-even ACOS is the ad cost, as a share of the sale price, at which an ad-driven sale makes exactly zero profit. Spend less than that and the sale makes money. Spend more and you lose money on every ad sale.
The formula
Break-even ACOS = profit per unit before ad spend ÷ selling price
Profit before ad spend is your price minus everything it costs to make and sell one unit: product cost, inbound shipping, Amazon referral fee, FBA fee and any other per-unit costs.
A worked example
- Selling price: $29.99
- Product cost plus shipping to Amazon: $7.00
- Referral fee (15%): $4.50
- FBA fee: $5.50
Profit before ads is $29.99 − $7.00 − $4.50 − $5.50 = $12.99. Break-even ACOS is $12.99 ÷ $29.99 = 43%.
Why your target should be lower
At 43% ACOS this product makes nothing on ad sales. Your target should sit below break-even so each sale still leaves profit. A product like this might target 25 to 30%, while a launch or a ranking push can run closer to break-even for a short, planned period.
Do it per product, not per account
Different products have very different margins. In one account we manage, break-even ACOS ranged from 47% to 54% across three products, while another brand’s portfolios ranged from 12% to 35%. One blended target hides the products that are quietly losing money.
Watch TACOS too
TACOS compares ad spend to total sales, including organic. If ACOS stays steady but TACOS climbs, your ads are carrying more of the business and organic sales may be slipping.
Want us to work out break-even ACOS for every product in your account? It is part of every free audit.