ACoS is the number most sellers look at first in their ad reports, and the one they misunderstand most often. A low ACoS can hide poor growth, and a high ACoS can be perfectly healthy at launch. Understanding Amazon ACoS lets you judge ads by profit, not by gut feeling.
This guide explains what ACoS means, how to calculate it, what a good ACoS looks like for your business and the steps that lower it.
Key Takeaways
- ACoS is advertising spend divided by ad sales, shown as a percentage.
- A good ACoS depends on your profit margin, so work out your break-even ACoS first.
- Lower ACoS by improving conversion, cutting wasted clicks and refining keywords and bids.
- Do not chase the lowest ACoS, because that can reduce sales and growth.
What Is ACoS on Amazon?
ACoS stands for Advertising Cost of Sales. It shows how much you spent on ads to earn each rupee of sales from those ads. The formula is simple: ad spend divided by ad sales, multiplied by 100. For example, if you spend Rs 3,000 on ads and the ads generate Rs 10,000 in sales, your ACoS is 30 percent.
ACoS, ROAS and TACoS Compared
| Metric | Formula | What it tells you |
|---|---|---|
| ACoS | Ad spend / ad sales | Cost of ads per rupee of ad sales |
| ROAS | Ad sales / ad spend | Sales returned for each rupee spent. Rs 10,000 / Rs 3,000 is about 3.3 |
| TACoS | Ad spend / total sales | How much of all sales goes to advertising |
ACoS focuses on ad-attributed sales, while TACoS looks at the whole business.
How to Find Your Break-Even ACoS
Your break-even ACoS equals your profit margin before ads. If you earn Rs 300 on a Rs 1,000 sale after product cost, fees, GST and shipping, your margin is 30 percent. At an ACoS of 30 percent you break even on ad sales. Above that you lose money on each ad order, and below it you make a profit.
- Work out your cost per unit, including packaging and returns
- Add Amazon fees, GST and shipping or fulfilment
- Subtract everything from the selling price to find your profit
- Divide profit by price to get the margin
- Use that margin as your break-even ACoS
What Is a Good ACoS?
| Stage | Typical approach to ACoS |
|---|---|
| Launching a new product | Accept a higher ACoS for a limited time to gain visibility, reviews and data |
| Growing an established product | Aim for an ACoS comfortably below break-even |
| Defending a strong product | Keep ACoS low while protecting rank and share |
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How to Lower Your ACoS Step by Step
- Fix the listing first. Better images, price and reviews raise conversion. See how to fix a low conversion rate on Amazon.
- Add negative keywords. Stop paying for irrelevant clicks. See Amazon PPC keyword strategy.
- Lower bids on terms that spend but do not sell.
- Move winning terms into exact match campaigns with tighter bids.
- Pause targets with many clicks and no orders after enough data.
- Review placements. Compare top of search with other placements and adjust.
- Check budget limits. Make sure good campaigns are not starved while poor ones spend.
- Review regularly. Weekly checks beat occasional big overhauls.
When a High ACoS Is Acceptable
- During a product launch while you build reviews and rank
- When ads help sell related products or repeat orders later
- When total sales and profit grow even though ACoS looks high
- During peak sale events with strong demand
Common ACoS Mistakes
- Chasing the lowest ACoS and losing sales volume
- Ignoring profit margin and using someone else target
- Judging a campaign after a day or two
- Cutting bids so low that ads stop showing
- Looking only at ACoS and ignoring total sales and TACoS
- Not accounting for returns and GST in profit calculations
Keep ACoS in context with your overall plan. See our guides to Amazon PPC for beginners, Amazon PPC bidding and budget and setting up Sponsored Products. Our Amazon management services help sellers connect ad spend to profit.
An ACoS Walkthrough With Real Numbers
Suppose you sell a product for Rs 800 and your profit before ads is Rs 240, so your break-even ACoS is 30 percent. In one week you spend Rs 2,000 on ads and the ads bring Rs 9,000 in sales. Your ACoS is 22 percent, which is below break-even, so the ads are profitable. If next week you spend Rs 2,000 but only earn Rs 5,000, ACoS rises to 40 percent. That is a loss on ad orders, and it tells you to review keywords, bids and the listing.
- Check which keywords spent the most with the fewest orders
- Check whether conversion dropped, or only traffic
- Look at price, stock and reviews for changes
- Compare with the week before, not only a single day
How Often Should You Review ACoS?
Check it weekly for each campaign, and look at the trend over a month. Daily swings are normal, especially with small budgets, so avoid reacting to one day of data.
Frequently Asked Questions
What does ACoS mean on Amazon?
ACoS means Advertising Cost of Sales. It is ad spend divided by ad sales, shown as a percentage.
How do I calculate ACoS?
Divide your advertising spend by the sales those ads generated and multiply by 100. For example, Rs 3,000 spend and Rs 10,000 sales gives 30 percent.
What is a good ACoS on Amazon?
It depends on your profit margin. A good ACoS is comfortably below your break-even level, though a higher ACoS can be acceptable during a launch.
What is break-even ACoS?
It equals your profit margin before ads. At that ACoS you neither gain nor lose on ad sales.
What is the difference between ACoS and ROAS?
ROAS is the reverse of ACoS. It shows sales earned for each rupee spent, so a 30 percent ACoS is a ROAS of about 3.3.
Why is my ACoS so high?
Typical reasons are a weak listing, irrelevant keywords, high bids, low conversion or too much spend on terms that do not sell.
Should I always try to lower my ACoS?
Not always. Pushing it too low can cut sales and growth, so balance ACoS with profit and total sales.
Want ads that bring profit, not just clicks?
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