Start from break-even ACOS
Your break-even ACOS is your profit margin before advertising: what is left of the price after Amazon's fees and your unit cost, as a share of the price.
(Price − referral fee − FBA fee − unit cost) ÷ price($24.99 − $3.75 − $4.50 − $6.00) ÷ $24.99 = 43%At 43%, an ACOS of 30% keeps 13 cents of profit on every ad-driven sales dollar, and an ACOS of 50% loses 7. Get yours in a minute with the break-even ACOS calculator.
Pick a target for the job
| Goal | Target ACOS | Why |
|---|---|---|
| Profit | Well under break-even | Keeps margin on every ad sale |
| Grow a proven product | Just under break-even | Buys the most sales that still pay |
| Launch | At or over break-even, for a set time | Buys sales history; decide the end date first |
| Your own brand terms | Far under break-even | These shoppers were already looking for you |
Whatever the target, write it down per product. A blended account ACOS hides a product losing money behind one making plenty.
What is a good ROAS, then?
ROAS is 1 divided by ACOS, so a good ROAS is one above your break-even ROAS: 1 divided by your break-even ACOS. A 43% break-even ACOS is a 2.3x break-even ROAS; a 25% one is 4.0x. A rule of thumb like "aim for 4x" is only right for a product whose margin happens to be 25%.
Check TACOS beside it
A product can hold a good ACOS while its ads quietly take over sales it used to make without them. TACOS, ad spend over all sales, catches that: if TACOS climbs while total sales stand still, the ads are not adding anything. ACOS vs TACOS.
Questions
- Is 30% a good ACOS?
- It is good if your margin before ads is above 30% and a loss if it is below. Compare it with your break-even ACOS, never with another seller's number.
- What is the average ACOS on Amazon?
- Averages mix categories with very different margins, so they cannot tell you whether your ACOS makes money. Your break-even ACOS can.
- Should my ACOS be the same on every campaign?
- No. Brand campaigns usually run far lower, discovery campaigns higher. What matters is that each product's ad spend pays for itself at the target you chose.