Break-even ACOS is one of the most useful numbers in Amazon advertising because it tells you the approximate advertising cost ratio at which a sale stops contributing profit before other overheads.
What is break-even ACOS?
ACOS is ad spend divided by attributed ad sales. Your break-even ACOS is based on the contribution margin available before advertising.
Simple formula: break-even ACOS = pre-ad contribution profit / selling revenue.
For example, if a £30 sale leaves £9 after VAT where applicable, product cost and marketplace fees, the break-even ACOS is 30%. Spending £9 to generate that £30 sale would consume the £9 contribution.
Break-even ACOS is not usually your target
If your goal is to make a profit on each advertised sale, your working target ACOS normally needs to be lower than break-even. The gap between target ACOS and break-even ACOS is the room left for profit and uncertainty.
A seller with a 30% break-even ACOS might use a lower target depending on launch stage, organic ranking, cash flow and the role of the campaign. There is no universal target that fits every product.
Numbers to include
- Selling price or revenue basis used for the calculation.
- VAT or sales tax treatment where applicable.
- Landed product cost.
- Marketplace referral and fulfilment fees.
- Other per-order costs that materially change contribution.
Do not copy another seller's ACOS target without knowing their margins. Two products selling for the same price can have completely different break-even points.
Use it at keyword level
Once you know your break-even and target ACOS, keyword and search-term decisions become more consistent. Terms producing sales well below target may justify more traffic. Terms materially above break-even need investigation rather than automatic scaling.
Low-data search terms are different from proven losers. A term with one click and no sale has not provided the same evidence as a term with substantial spend and repeated non-conversion.
Keep the calculation current
Marketplace fees, product costs and selling prices change. Recalculate when the economics change instead of treating break-even ACOS as a permanent number.
Browse our Amazon seller calculators and PPC tools for spreadsheet-based ways to track these numbers.
Try it with your own numbers: use the free Amazon Break-Even ACOS Calculator, then use the FBA Profit Calculator - UK when you want a reusable spreadsheet model.
Independent seller resource. Not affiliated with or endorsed by Amazon. Examples are for planning purposes only.