Amazon ACoS 101: Everything You Need to Know About This Core Amazon Metric

Originally published: May 27, 2021

Amazon ACoS is one of the most important metrics for judging how well your Sponsored Ads are performing. ACoS (Advertising Cost of Sales) shows the relationship between how much you spend on ads and how much revenue those ads generate, expressed as a percentage.

In simple terms, ACoS tells you what percentage of your ad-attributed sales is being eaten by ad spend.

Because it directly reflects ad profitability, it’s one of the main numbers you should monitor when optimizing Amazon PPC.

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How Do You Calculate ACoS on Amazon?

The formula is very straightforward:

ACoS = Ad Spend ÷ Ad Sales

Example:
If you spend $25 on ads and generate $100 in sales from those ads, your ACoS is:

25 ÷ 100 = 0.25 → 25%

You can look at ACoS over different date ranges (daily, weekly, monthly) and across different levels of granularity:

• Keyword level
• Ad group level
• Campaign level
• Account level

Your goal is to maintain a profitable ad spend-to-sales ratio at each level, starting with small segments (like individual keywords) while never losing sight of the overall account performance.

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What’s the Difference Between ROAS and ACoS on Amazon?

ACoS and ROAS are two sides of the same coin—they both measure how efficiently your ads turn spend into revenue.

• ACoS (Advertising Cost of Sales) – Shows what percentage of your sales comes from ad spend.
• ROAS (Return on Ad Spend) – Shows how many times your ad spend comes back to you as revenue.

They are mathematical inverses.

Using the same example: you spend $25 and make $100 in sales.

• ACoS = 25%
• ROAS = 100 ÷ 25 = 4 (often written as 4x or 400%).

The key difference is perspective:

• ACoS is usually expressed as a percentage (lower is better for profitability).
• ROAS is usually expressed as a multiplier/number (higher is better).

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What Is TACoS?

TACoS (Total Advertising Cost of Sales) looks at the bigger picture.

Instead of comparing ad spend only to ad-attributed sales, TACoS compares:

Ad Spend ÷ Total Sales (ad + organic)

This metric shows how much your entire revenue (including organic sales) depends on advertising.

Over time, your goal is generally to lower TACoS (for example, below 10–5%, depending on your niche, price point, and sales velocity). A low TACoS usually indicates that:

• Your products rank well organically.
• You’re less dependent on ads to generate sales.

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What Is Break-Even ACoS?

Break-even ACoS is the maximum ACoS you can afford to have without making a loss. At this ACoS, your profit from the product is fully consumed by ad spend—so your net profit is zero.

To calculate it, you first need to know your profit margin before ads:

1. Start with your Amazon sales price.
2. Subtract:
   • Product cost
   • Shipping cost
   • Amazon fees
   • Other operating costs

What remains is your profit per unit before advertising.

Example

Let’s say:

• Sales price: $30
• Amazon fee: $5
• Other operating costs: $18

Total costs: $23

You’re left with:

$30 – $23 = $7 profit per unit before ads

That means you can spend up to $7 on ads per sale before you start losing money.

To get break-even ACoS:

Break-even ACoS = Profit Margin ÷ Sales Price
Break-even ACoS = 7 ÷ 30 ≈ 23.3%

So, at an ACoS of 23.3%, you’re exactly breaking even.

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What Is Target ACoS?

Your target ACoS is the ACoS you’re aiming for while optimizing your campaigns, based on your business goals.

In most cases, that goal is profitability.

To set a realistic target ACoS, you need to:

1. Know your break-even ACoS.
2. Decide what margin you want to keep as actual profit.
3. Aim for an ACoS below that break-even point.

Keep in mind:

• A lower ACoS doesn’t automatically mean higher overall sales—it just means you’re spending less to generate each dollar of ad-attributed revenue.
• Sometimes, a slightly higher ACoS can be acceptable if it helps you grow faster in the long run.

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What Is a Good ACoS on Amazon?

People often say that the average ACoS on Amazon is around 30%, but this is only a ballpark and can vary a lot by:

• Category
• Product type
• Price point
• Competition level

There is no universal “good ACoS”. A good ACoS is the one that matches:

• Your goals (profit, growth, ranking, awareness)
• Your current strategy

Generally:

• Lower ACoS → More profitable ads
• Higher ACoS → Less profit, but maybe more visibility or growth

When a Higher ACoS Can Still Be “Good”

Sometimes you may intentionally accept unprofitable or break-even campaigns:

1. Product Launches & Ranking Campaigns

When launching a new product, you might push aggressive bids on your most relevant keywords to:

• Gain reviews
• Improve organic rank
• Increase visibility

These campaigns often operate at a high ACoS (or low ROAS) and may even run at a loss for a while, especially for “ranking” campaigns targeting top-of-search placements.

2. Brand Awareness Campaigns

For top-of-funnel Sponsored Brands or display-style campaigns focused on visibility rather than immediate sales:

• A higher ACoS may be acceptable.
• The main aim is reach and traffic, not short-term profit.

On the other hand, when your main objective is profitability and stable sales, you should work towards an ACoS that is:

• Equal to or below your target ACoS
• In line with the profit you want to keep per sale

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How to Optimize ACoS on Amazon

Once you understand what ACoS is and how it works, the next step is using it to adjust and improve your campaigns.

The most important thing is to be clear about your goal:

• Do you want to cut costs?
• Increase sales volume?
• Grow visibility and reach?
• Improve overall profitability?

Your answer determines how aggressively you’ll adjust bids and what you consider a “good” ACoS for each keyword or campaign.

Core Concept: Bid Adjustments

Most ACoS optimization comes down to changing bids:

• If a keyword has high, non-profitable ACoS → Lower the bid.
• If a keyword has low, profitable ACoS and converts well → Increase the bid to capture more traffic.

You should also consider:

• Suggested bids and bid ranges Amazon shows
• Your actual CPC (cost per click)
• Your budget limits

Key Factors to Consider Before Changing Bids

1. Goal of the campaign
   
   If the goal is sales and profit, you’ll lower bids more aggressively on poor performers. If your goal is visibility or ranking, you might tolerate higher ACoS for strategic keywords.
   
   
2. Keyword relevancy
   
   Some keywords are extremely important for your product (main search terms, brand terms). Even if they temporarily have:
   • High ACoS
   • Weak conversion
   You might still keep or only slightly lower the bid instead of pausing them. These are strategic keywords, crucial for long-term positioning.
   
   
3. Date range
   
   Always compare performance over multiple time windows:
   • Last 7 days
   • Last 14 days
   • Last 30–45 days
   A keyword may look good overall for 30–45 days, but in the last 7 days it may have stopped converting. Before adjusting:
   • Look for trends
   • Check if something changed (price, competition, reviews, stock, etc.)
   
   
   
4. CPC and competitiveness
   
   Sometimes the bid needed to compete for a keyword is simply too high for your margins. Even if the keyword is relevant, raising the bid further might not make sense if:
   • CPC is very high
   • Your profit per unit is relatively low
   
   
   
5. Impressions, clicks, and CTR
   
   Don’t rush to change bids if you don’t have enough data. A few clicks or low impressions aren’t enough to judge performance. Look at:
   • Impressions
   • Number of clicks
   • Click-through rate (CTR)
   These help you decide whether a keyword needs a bid change, new match type, better creatives, or more time.
   
   
6. Conversion rate
   
   This is one of the most important indicators. When combined with a solid number of clicks and impressions, conversion rate tells you:
   • Which keywords deserve higher bids
   • Which ones should be reduced or paused
   High conversion + low ACoS usually signals a keyword worth prioritizing.
   
   

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Final Thoughts

ACoS is a core metric for measuring the success of your Amazon PPC campaigns—but it shouldn’t be the only thing you look at.

When optimizing your account, always consider:

• Keyword relevancy
• CPC and competitiveness
• Number of clicks and impressions
• CTR and conversion rate
• Your overall goals (profit vs growth vs awareness)

There is no globally “good” or “bad” ACoS—only one that fits (or doesn’t fit) your strategy and margins.

Ultimately, a “good ACoS” for you is:

The ACoS at which you achieve your desired outcome (profit, rank, or visibility) with the lowest necessary spend.

Consistent, data-based optimization and regular review of your campaigns are what will move you closer to that ideal point.