Break-even ACOS is your margin before ads
Break-even ACOS
(Price − Amazon fees − unit cost) ÷ price × 100($24.99 − $8.25 − $6.00) ÷ $24.99 = 43.0%At exactly that ACOS, an ad sale pays its own fees and cost and leaves nothing. Every point under it is profit; every point over it is a loss on that sale. It is the only line that turns ACOS into a yes or no.
From break-even ACOS to a bid
If a keyword converts at the same rate and order value, its ACOS moves with what you pay per click. So the bid that brings it to target is the current bid scaled by target ACOS over current ACOS.
Bid at target ACOS
Current bid × (target ACOS ÷ current ACOS)$1.30 × (37% ÷ 78%) = $0.62Treat that as a ceiling, not an order. A lower bid can lose placement and change the conversion rate it was calculated from, so move in steps and read the result after a full attribution window.
Should you aim at break-even?
- Profit: aim well under break-even. A target of half your break-even keeps about half the margin on every ad sale.
- Launch or growth: you may run at or above break-even on purpose to buy sales history. Decide the length of that spend before it starts, and check it weekly.
- Defending your own brand terms: these usually run far under break-even. If one does not, the term is worth a look.
What is a good ACOS? goes through each case.
Questions
- What is break-even ACOS?
- The ACOS at which an ad sale makes exactly zero profit. It equals your profit margin before advertising: price less Amazon's fees and your unit cost, divided by price.
- Is break-even ACOS the same for every product?
- No. Each product has its own price, fees and cost, so each has its own break-even. A campaign selling several products has a blend of them.
- Can break-even ACOS be negative?
- If a product loses money before any advertising, there is no ACOS at which an ad sale breaks even. The calculator says so instead of printing a negative percentage.
Keep going
Free toolsACOS calculatorACOS and ROAS from spend and ad sales, TACOS when you add total sales.Free toolsAmazon FBA profit calculatorProfit per unit, margin and breakeven ACOS from your price, cost and FBA fee.GuidesWhat is a good ACOSWhy a good ACOS depends on margin, and how to set your own target.GuidesThe weekly Amazon PPC auditSix checks that find wasted spend and missed sales, in the order they pay.