If you’re running ads on Amazon, you’ve probably heard the term ACoS tossed around a lot. But what does it really mean, and why does it matter so much? Think of ACoS Amazon as your campaign’s “health score.” It tells you exactly how much you’re spending on ads to earn each dollar of sales. Get it right, and your ads become a profit engine. Get it wrong, and you’re burning money.
The problem is that most sellers either ignore ACoS or don’t fully understand how to use it to their advantage. And that’s a huge missed opportunity. With competition on Amazon at an all-time high in 2025, knowing how to calculate and improve your ACoS can be the difference between scaling profitably or stalling out.
This guide will break everything down for you — from what ACoS actually means and how to calculate it for your campaigns and actionable ways to lower it without sacrificing growth. Whether you’re new to Amazon PPC or managing multiple campaigns, by the end of this guide you’ll have a clear roadmap to make smarter ad decisions, maximize ROI, and outpace your competitors in 2025.
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What is Amazon ACoS?
Amazon ACoS, or Advertising Cost of Sales, is a crucial metric for any seller running pay-per-click (PPC) campaigns on Amazon. It measures the efficiency of your advertising spend by showing how much you’re spending on ads for every sale made. Simply put, it helps you understand the relationship between your ad spend and the revenue it generates.
ACoS is calculated by dividing your total ad spend by the sales attributed to those ads, then multiplying the result by 100 to express it as a percentage. This percentage is your ACoS, which serves as a clear indicator of whether your advertising efforts are profitable.
A lower ACoS is typically a sign that your ads are converting well, delivering a higher return on investment (ROI) while keeping costs in check. On the flip side, a high ACoS suggests that your ads are costing you more than they’re earning, signaling the need for optimization.
For any successful Amazon seller, the goal is to optimize your campaigns in a way that keeps ACoS as low as possible. This can mean tweaking targeting, adjusting bids, refining keywords, or revisiting your entire ad strategy. A carefully managed ACoS means more efficient sales generation, higher profits, and the ability to reinvest in your business for growth.
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ACoS Formula: How to Calculate Amazon ACoS
To make smart decisions with your Amazon ads, you need to know your Advertising Cost of Sales (ACoS) precisely. It’s a simple ratio, but one that carries a lot of weight. Here’s how ACoS is calculated, what each component means, and why understanding this formula is foundational.
ACoS Formula Breakdown
The standard formula for ACoS is: ACoS = Ad Spend ÷ Ad Revenue X 100
Ad Spend is the total amount you’ve paid for your Amazon PPC (pay-per-click) ads during a given period.
Ad Revenue (or sometimes “Attributed Sales”) is the sales revenue generated by those ads (i.e., from clicks on your ads that led to purchases).
Multiplying by 100 converts the result into a percentage.
Example: If you spend $150 in ad spend and those ads generate $600 in sales, your ACoS is: ACoS = ($150 ÷ $600) × 100 = 25%
That means you spent 25 cents in ads for every dollar of sales that the ads generated. If you had higher ad spend or lower revenue, that percentage goes up, which means less efficiency.
Levels to Calculate ACoS
You can calculate ACoS at various levels, depending on what you want to measure:
Campaign level: Sum of ad spend and ad revenue for a single campaign.
Ad group level (if applicable) or keyword level: How each keyword or ad group is performing.
Account level: All your Amazon ad campaigns aggregated.
Amazon’s campaign manager/dashboard usually provides ACoS for campaign and account levels automatically. It also sometimes shows keyword-level or product-targeted ACoS if you enable those columns.
Break-Even ACoS & Profit Margin
Knowing just the raw ACoS isn’t enough; you need to know what ACoS you can tolerate — your break-even point. Break-even ACoS is essentially the highest ACoS you can have before ad costs eat into all your profits. To calculate it, you first need your profit margin. Here’s how:
Compute Profit Margin = (Sale Price − Cost of Goods Sold − Amazon fees, fulfillment, shipping, etc.) ÷ Sale Price
Your Break-Even ACoS ≈ that profit margin (expressed as a percentage)
For example, if a product sells for $100, costs (product + fees + shipping) are $60, then your profit margin is 40%. That means you have a break-even ACoS of ~40%; anything above that and you’re losing money on ad sales.
Why This Matters
Budget control: If your ACoS is below your break-even margin, ads are profitable (after product & overhead costs).
Bidding / targeting strategy: Helps decide if you need to reduce bids, refine keyword targeting, or pause underperforming ads.
Goal alignment: Knowing your target ACoS (which might be lower than break-even if you want profit) lets you measure success beyond just sales volume.
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What is a Good Amazon ACoS?
When people ask “what is a good ACoS on Amazon”, there is no one-size-fits-all answer. It depends heavily on your product margin, category, ad goals (profit vs. visibility), and how optimized your listing is. That said, industry benchmarks and expert recommendations can give useful target ranges to aim for.
Industry Benchmarks & Averages
Many sources point out that a typical or average ACoS tends to fall somewhere between 25% and 40%.
A “low” ACoS — which implies better efficiency and higher profitability — is often under 25%.
An ACoS above 40% is generally considered high, and may indicate that ad spend is too aggressive or conversions are too low.
What Makes a “Good” ACoS for Your Situation
Here are a few factors that decide what a good ACoS looks like for you:
Profit Margin
If your product has high margin (say 30-40% or more), you can afford to allow a higher ACoS while remaining profitable. But low-margin items demand tighter ACoS to protect profit.Campaign Goal
Profit-focused campaigns: Aim for lower ACoS (e.g., under 25%) so every ad dollar contributes meaningfully to bottom line.
Visibility or growth campaigns: When launching new products or trying to push rank, you might accept a higher ACoS (30-40% or even more) to gain traction.
Competition & Category
Some categories are naturally more competitive (electronics, fashion, etc.), so achieving low ACoS is harder. The same ACoS number might be great in one niche, but unsustainable in another. Benchmark your performance against similar products.
Practical Ranges to Use as Reference
These are rough guidelines many Amazon advertisers use in 2025:
| Goal / Scenario | ACoS Target Range |
|---|---|
| High profitability / margin sensitive products | 15%-25% |
| Balanced goals (profit + growth) | 25%-35% |
| Product launch, growth, or increased visibility | 30%-50% |
Key Takeaway
A “good” ACoS is one that is lower than your break-even point (after accounting all costs) while aligning with your advertising objectives. Use category benchmarks as a guide. But always measure against your margins, goals, and current ad performance. Tweaking your campaigns (keywords, bids, listing quality, etc.) helps shift your ACoS into a range where your Amazon ad spend becomes truly profitable.
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What is a Break-Even ACoS
Break-Even ACoS is the percentage point at which your advertising spend equals the profit margin of your product. In other words, it’s the ACoS where you are neither making profit nor losing money on ad campaigns. If your Amazon ACoS goes above this break-even threshold, your ads are hurting your bottom line. If it stays below, your ads are contributing to profit.
How to Calculate Break-Even ACoS
To find your break-even ACoS, follow these steps:
Calculate Your Total Cost Per Unit
Add up all costs involved in getting the product sold. This includes:Cost of Goods Sold (COGS)
Amazon fees (referral, FBA/storage or fulfillment, etc.)
Shipping, packaging, returns, and other overheads
Determine Profit Margin Before Advertising
Subtract the total cost per unit from the product’s sale price; then divide that difference by the sale price. Multiply by 100 to turn it into a percentage.Profit Margin (%) = ((Sale Price – All Costs) ÷ Sale Price) × 100
For example: if your product is sold for $100, and all your fees, shipping, cost of goods etc. add up to $60, your profit margin is 40%.
Set Break-Even ACoS = Profit Margin
Your break-even ACoS is this margin. In the example above, the break-even ACoS is 40%. That means if your ACoS is 40% or lower, you are breaking even or making a tiny profit. If it climbs above 40%, ad spend eats into your profit.
Why Break-Even ACoS Matters
Profit Protection: Knowing this point helps you prevent campaigns that look like they’re generating sales but are actually costing you money.
Clear Benchmarks: It gives you a baseline to structure your campaigns—target or ideal ACoS goals, bid limits, keyword thresholds.
Decision-Making: Helps in choosing which products or ads to scale and which to pause. If a campaign’s ACoS is way above break-even, it may be time to optimize or shift budget.
Example
Imagine you sell a product for $50. Your total costs (COGS, Amazon fees, shipping, etc.) per unit are $35. That leaves you with a pre-ad profit margin of $15, which is 30% of the sale price. So:
Sale Price = $50
Costs = $35
Profit Margin = (50 − 35) ÷ 50 × 100 = 30%
Therefore, your Break-Even ACoS = 30%
If your Amazon ACoS is 30% or lower, your ads are not losing money. If higher, you are losing money on advertising for that product.
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What is ROAS?
ROAS stands for Return on Ad Spend. It’s a simple but powerful way to measure how much revenue you’re earning for every dollar you spend on advertising. Unlike ACoS, which shows your ad cost as a percentage of your revenue, ROAS tells you the return you’re getting back.
The formula is:
ROAS = Revenue from Ads ÷ Ad Spend
For example, if you spend $200 on Amazon ads and they generate $800 in sales, your ROAS is 800 ÷ 200 = 4.0. This means that for every $1 you spent on ads, you earned $4 in revenue.
Why this matters: A higher ROAS means your campaigns are more efficient and bringing in more revenue per dollar spent. It’s a quick way to judge whether your ads are worth scaling or need optimization.
ACoS vs. ROAS: What Are the Differences
Both ACoS and ROAS are key Amazon advertising metrics, but they measure performance from opposite perspectives.
ACoS (Advertising Cost of Sale) shows you how much you’re spending on ads to earn one dollar of revenue. It’s expressed as a percentage. Lower ACoS means you’re spending less to generate each sale, which is good for profitability.
ROAS (Return on Ad Spend) tells you how much revenue you’re earning for each dollar spent on ads. It’s expressed as a ratio. Higher ROAS means you’re making more money for every dollar spent, which is good for growth.
In other words, ACoS focuses on cost while ROAS focuses on return. They’re basically two sides of the same coin:
If your ACoS is low, your ROAS will be high.
If your ACoS is high, your ROAS will be low.
For example, if you spend $100 on ads and make $500 in sales, your ACoS would be 20% while your ROAS would be 5.0.
Put simply:
Use ACoS when you’re analyzing margins and break-even points.
Use ROAS when you want to quickly see how much return you’re getting for your ad dollars.
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What is TACoS (Total Advertising Cost of Sales)?
TACoS stands for Total Advertising Cost of Sales, and it’s a metric that gives you a bigger picture of how your advertising spend affects your overall Amazon revenue—not just the revenue from ad-driven sales.
Unlike ACoS (which measures ad spend divided by ad-attributed sales), TACoS looks at ad spend compared to total sales, including both organic and paid. This gives sellers a clearer sense of how their advertising is impacting the growth of their entire business on Amazon.
For example, if you spend $500 on ads and generate $2,000 in ad-attributed sales, your ACoS is 25%. But if your total sales (organic + ad-attributed) are $5,000, your TACoS would be 10% ($500 ÷ $5,000).
A lower TACoS over time usually means your advertising is successfully boosting organic sales—customers are discovering your product through ads, buying, and then continuing to purchase organically. A high TACoS, however, can indicate that your brand is relying too heavily on ads to drive revenue without building enough organic traction.
In other words:
ACoS = “How profitable are my ads themselves?”
TACoS = “How does my ad spend impact my entire Amazon business?”
Tracking TACoS alongside ACoS helps sellers decide whether their ad strategy is truly sustainable and profitable in the long run.
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What Factors Influence ACoS Amazon
Your ACoS (Advertising Cost of Sales) isn’t random — it’s shaped by a number of key levers. Understanding what moves the needle lets you manage your ad spend more intelligently, avoid waste, and improve profitability. Here are the main factors that influence your ACoS, and how they do so:
Product-Related Factors
These revolve around the inherent characteristics of what you’re selling, which can dictate how much ad spend is needed to drive sales.
- Product Price Point: Higher-priced items typically yield a lower ACoS because each sale generates more revenue, allowing ad costs to be a smaller percentage of total sales. For low-priced products (e.g., under $20), ACoS might climb higher since you need more sales volume to cover the same ad spend—think of it like spreading butter thinly over too much bread. Tip: If selling budget items, focus on high-volume keywords to increase clicks and conversions without inflating bids.
- Product Maturity or Newness: New launches often require aggressive advertising to build visibility, reviews, and organic rankings, leading to a higher initial ACoS (e.g., 30%+). As the product matures and gains traction, organic sales rise, reducing reliance on ads and lowering ACoS. Interestingly, this mirrors a product’s life cycle: introduction phase = high ACoS for growth; maturity = low ACoS for profit harvesting. Example: A new gadget might start at 40% ACoS but drop to 15% after accumulating 500 reviews.
- Profit Margins and COGS (Cost of Goods Sold): Products with slim margins (e.g., 10-20%) demand a lower ACoS to stay profitable, as high ad costs could eat into earnings. Conversely, high-margin items (40%+) afford a higher ACoS for aggressive growth. Calculate your break-even ACoS first: Break-even ACoS = (1 – Profit Margin) × 100. If your margin is 30%, aim for under 70% ACoS to avoid losses.
- Repeat Purchase Potential (Lifetime Value): Consumables or high-LTV products (e.g., subscription items like vitamins) justify a higher upfront ACoS, as future buys offset initial costs. This is a game-changer for brands—think how coffee pods encourage loyalty, allowing 25% ACoS on the first sale while banking on repeats.
2. Market and Competition Factors
External market forces can force your hand on ad spending.
- Competition Level: In crowded categories (e.g., electronics), you’ll face higher cost-per-click (CPC) from bidding wars, pushing ACoS up. Niche markets with less rivalry allow lower bids and ACoS. Fun fact: Tools like Jungle Scout can help scout competition density before launching. Strategy: Use long-tail keywords to sidestep fierce competition.
- Category Competitiveness and Demand: Beyond general competition, specific niches vary—high-demand items might convert better, lowering ACoS, but oversaturated ones do the opposite. For example, seasonal toys spike in demand during holidays, temporarily improving ACoS.
- Seasonality: Peak times (e.g., Black Friday) boost sales volume but ramp up competition, often increasing ACoS. Off-seasons might see higher ACoS due to lower demand requiring more ad push. Pro tip: Scale budgets during highs and optimize for efficiency in lows.
3. Advertising and Optimization Factors
How you run your campaigns directly tweaks ACoS.
- Keywords and Bidding Strategy: Irrelevant or overly competitive keywords inflate CPC and ACoS. Relevant, high-converting ones (e.g., via automatic bidding or Search Term Isolation) lower it. Example: Negative keywords prevent wasteful clicks, potentially dropping ACoS by 10-20%.
- Conversion Rate and Click-Through Rate (CTR): High CTR (from compelling ads) and conversion rates (from optimized listings) mean more sales per ad dollar, slashing ACoS. Poor listings (bad images or copy) do the reverse. Optimize with A/B testing—e.g., better photos can boost conversions by 30%.
- Campaign Type, Strategy, and History: Sponsored Products vs. Brands campaigns vary in cost; older, data-rich campaigns optimize better, lowering ACoS over time. Strategies like targeting refinements or automation tools (e.g., Scale Insights) can fine-tune this.
- Brand Awareness and Sales Goals: Building brand visibility might tolerate higher ACoS (e.g., for new entrants), while profit-focused goals demand lower ones. New brands often start at 40% ACoS to gain footing.
Quick Comparison Table: ACoS Impact by Factor
| Factor | Typical Impact on ACoS | Example Scenario | Optimization Tip |
|---|---|---|---|
| High Product Price | Lower | $100 item with $10 ad spend/sale | Focus on premium positioning |
| High Competition | Higher | Electronics niche bidding wars | Use long-tail keywords |
| Peak Seasonality | Variable (often higher) | Holiday rush | Increase budget, monitor closely |
| Strong Listings | Lower | High-conversion images/copy | A/B test elements |
| High Profit Margins | Higher tolerance | 50% margin product | Set aggressive bid strategies |
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How to Monitor ACoS on Seller Central
Amazon’s Advertising Cost of Sales (ACoS) is a key PPC metric showing ad efficiency. Monitoring it in Seller Central helps optimize campaigns for profitability. Here’s a concise step-by-step guide based on Amazon’s tools as of 2025.
Step-by-Step Monitoring
- Log In to Seller Central: Access your account at sellercentral.amazon.com. Ensure you have advertising access (e.g., via Sponsored Products, Brands, or Display).
- Navigate to the Advertising Console: From the main menu, click “Advertising” > “Campaign Manager” (or directly via advertising.amazon.com). This dashboard shows real-time metrics for your campaigns.
- View ACoS in Campaigns: Select a campaign or ad group. Click the arrow next to KPIs (e.g., beside Spend or Clicks) and choose “ACoS” from the dropdown to display it. Filter by date range for trends.
- Access Detailed Reports: Go to “Reports” > “Advertising Reports” (or “Business Reports” for broader insights). Select “Sponsored Products” or similar, then download/search for ACoS data. Use tabs like “Search Term Report” for granular views.
- Set Up Alerts and Automation: In Campaign Manager, enable performance notifications for ACoS thresholds. Integrate with tools like Amazon’s API or third-party software for automated tracking.
Quick Tips
- Frequency: Check weekly; aim for ACoS under your break-even (e.g., 20-30% for many niches).
- Troubleshooting: If ACoS isn’t visible, ensure campaigns are active and data has accrued (24-48 hours delay possible).
- Advanced: Calculate TACoS (Total ACoS) in reports for overall ad impact on sales.
Regular monitoring lets you adjust bids, keywords, and budgets to lower ACoS and boost ROI. For official updates, visit Amazon’s Advertising Help Hub.
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Advanced Strategies to Lower Your Amazon ACoS
Refine Your Keyword Strategy
Start with Broad Match: Use broad keywords to discover what works, then move the successful ones to more targeted keyword types (like Phrase or Exact Match) to save money.
Use Auto Campaigns: These can help you find new keywords. Regularly check your search term reports and add negative keywords to avoid wasting clicks.
Target Long-Tail Keywords: Try more specific phrases like “wireless headphones under $50.” These usually cost less and have higher chances of converting.
Use AI Tools to Optimize Bids and Listings
Automate Bids with AI: Tools can automatically adjust your bids based on real-time data. You can set AI to lower bids when ACoS is too high or increase bids for high-performing products.
Improve Listings: AI can help improve your titles and descriptions, making them more appealing and relevant, which can increase click-through rates (CTR) and conversions.
Structure Your Campaigns by Product
Single ASIN Campaigns (SAC): Set up separate campaigns for each product, so you can adjust bids and budgets specifically for each one.
Focus on High Performers: If you have products with high sales, spend more on them to drive even more revenue. Use automatic campaigns to discover new keywords, then move the successful ones to manual campaigns for better control.
Use Dayparting and Placement Adjustments
Dayparting: This means adjusting your bids based on the time of day. For example, increase your bids during peak shopping hours (like evenings) and lower them during off-hours to save money.
Placement Adjustments: If you’re getting a high ACoS on certain placements (like “Rest of Search”), lower your bids there. But if your ads perform well at the “Top of Search,” increase your bid to get more visibility.
Target Competitors and Easy Wins
Bid on Competitor Listings: Target competitor products that have weak listings (like bad reviews) to capture their traffic.
Look for “Low-Hanging Fruit” Keywords: Check your organic search performance to find keywords you’re not already advertising on. Adding them to your campaigns can boost sales without much extra cost.
Analyze Non-Converting Spend and SKU Performance
Cut Non-Converting Keywords: If certain keywords are getting a lot of clicks but no sales, pause them. This will save up to 70% of your ad budget.
Track SKU Performance: Keep an eye on how ads are affecting your overall sales, not just the ad sales. Aim for a stable TACoS (e.g., 10-15%) to make sure your ads are helping with long-term growth, not just short-term sales.
Improve Product Listings and Run A/B Tests
Optimize Product Pages: High-quality images, clear descriptions, and enhanced content can increase conversions and reduce your ACoS.
A/B Testing: Regularly test different versions of your product titles, images, or ad creatives to find what works best. Even small improvements can lead to lower ACoS over time.
Track the Bigger Picture and Scale Smartly
Track Metrics Beyond ACoS: Keep an eye on ROAS (Return on Ad Spend) and TACoS to get a full view of your ad performance. If your TACoS is rising, it could mean you’re too reliant on ads.
Scale Gradually: Once you find what’s working, increase budgets by 20-50% for top-performing keywords. Pause underperforming ones. Use automation tools to keep campaigns efficient as you scale.
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Conclusion: Amazon ACOS
Understanding ACoS on Amazon is more than just learning a formula—it’s about knowing how your advertising spend directly impacts your sales and profitability. From calculating your ACoS to understanding related metrics like break-even ACoS, ROAS, and TACoS, these insights give you the power to make smarter, data-driven decisions.
A low ACoS doesn’t always mean success, and a high ACoS doesn’t always mean failure. What matters is how your campaigns align with your profit margins, your product’s lifecycle, and your long-term goals. By monitoring the key factors—product quality, keyword targeting, bidding strategy, and performance metrics—you can optimize your campaigns to lower costs and increase conversions over time.
In short, ACoS is not just a number; it’s a roadmap for improving your Amazon advertising strategy. Sellers who understand and actively manage their ACoS can gain a competitive edge, grow their organic sales, and make their ad spend work harder for them.
Frequently Asked Questions: Amazon ACOS
What does ACoS mean on Amazon?
ACoS (Advertising Cost of Sales) is a key metric in Amazon advertising that measures how much you’re spending on ads to generate a dollar of revenue. It’s calculated as ad spend divided by ad revenue, expressed as a percentage.
What is a good ACoS on Amazon?
A “good” ACoS varies depending on your product margins and business goals. Many sellers aim for 15–30% as a benchmark, but your ideal ACoS depends on whether you’re prioritizing profitability, visibility, or scaling sales.
How do I calculate my ACoS on Amazon?
You can calculate ACoS using this formula:
ACoS = (Ad Spend ÷ Ad Revenue) × 100
For example, if you spend $50 on ads and make $200 in revenue, your ACoS is 25%.
What is the difference between ACoS and TACoS?
While ACoS measures ad spend against ad revenue only, TACoS (Total Advertising Cost of Sales) shows how your ad spend impacts your total sales—including organic revenue. TACoS gives a better picture of overall business health.
How can I lower my ACoS on Amazon?
To lower your ACoS, focus on refining your keyword targeting, optimizing your product listings, using negative keywords to block irrelevant clicks, improving your bids, and monitoring your campaigns regularly.
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