If you sell on Amazon, you’ve probably heard of ACoS. It’s one of the most important numbers that decides whether your ads make money or waste it.
Many sellers run PPC campaigns without fully understanding what ACoS means, how it affects profit, or how to optimize it.
In this guide, you will learn what ACoS is. You will also find out how to calculate it. We will discuss what a good ACoS looks like.
Finally, we will cover how to improve it for better Amazon PPC results. Let’s start by understanding what ACoS actually means and why it matters so much.
What Does ACoS Mean on Amazon
ACoS stands for Advertising Cost of Sales. It measures how much of your revenue from ads was spent on advertising.
Here’s the simple formula for ACoS:
ACoS = (Ad Spend ÷ Ad Sales) × 100
If you spent $50 on ads and earned $200 in sales from those ads, your ACoS would be 25%.
That means 25% of your ad-attributed revenue went toward advertising costs.
A lower ACoS means your campaign is more efficient. A higher ACoS means your ads cost more compared to your sales.
This metric is the core of Amazon PPC advertising because it helps sellers measure profitability.
Why ACoS Is Important for Amazon Sellers
Your ACoS tells you how well your campaigns are performing. It directly affects your profit margin and ad strategy.
Here’s why it’s so important:
- It measures ad efficiency.
- It shows if your ad spend is profitable.
- It helps you control advertising budgets.
- It guides keyword and bid optimization.
- It shows the link between advertising and total sales.
Every Amazon seller must monitor ACoS closely. Without it, you can’t make data-driven decisions to scale your ads profitably.
How to Calculate ACoS on Amazon
Calculating ACoS is simple but powerful.
- Find your Ad Spend.
- This is the amount you paid for clicks on your ads.
- Find your Ad Sales.
- This is the total sales generated from those ads.
- Apply the formula.
- Divide Ad Spend by Ad Sales, then multiply by 100 to get a percentage.
For example:
You spent $60 and earned $300 in sales.
ACoS = (60 ÷ 300) × 100 = 20%.
That means you spent 20 cents on advertising for every dollar you earned in ad sales.
What Is a Good ACoS on Amazon
The answer depends on your product, profit margin, and goals.
A good ACoS is one that’s below your break-even point.
Your break-even ACoS is equal to your profit margin.
If your profit margin is 30%, your break-even ACoS is 30%.
- Below 30% / You’re profitable.
- At 30% / You’re breaking even.
- Above 30% / You’re losing money.
For most sellers, a good ACoS is between 15% and 25%.
But remember, ACoS can vary:
- Product launches may have higher ACoS.
- Established listings should aim for lower ACoS.
- Competitive categories may naturally have higher ACoS.
Understanding Break-Even ACoS
Before you can decide if your ACoS is good or bad, you must know your break-even point.
Break-even ACoS = Profit Margin × 100.
Example:
If your product sells for $50 and costs $35 (including Amazon fees, shipping, and product cost), your profit margin is 30%.
So your break-even ACoS is 30%.
Anything below that means profit. Anything above means loss.
Knowing your break-even point helps you make smarter bidding decisions in Amazon PPC campaigns.
What Does a High ACoS Mean
A high ACoS means your ads are expensive compared to your sales. It could signal:
- Poor targeting or wrong keywords.
- Low conversion rate on your listing.
- Irrelevant audience clicks.
- Weak product pricing or offer.
If your ACoS keeps rising, check your campaign data. Focus on keywords with high clicks but no conversions and remove them.
High ACoS usually points to a problem in campaign setup or listing optimization.
How to Lower ACoS on Amazon
Here’s how top Amazon sellers lower ACoS and boost profits.
Optimize Your Product Listing
- Use high-quality images.
- Write keyword-rich bullet points.
- Add a clear title and strong call to action.
- Make sure your price matches customer expectations.
A well-optimized listing converts better, which lowers ACoS naturally.
Improve Keyword Targeting
Use Amazon keyword research tools to find relevant keywords with buying intent.
Avoid broad or unrelated terms.
Use match types effectively:
- Exact match for precise control.
- Phrase match for balanced reach.
- Negative keywords to avoid wasteful clicks.
Adjust Bids Regularly
Monitor campaigns daily.
- Lower bids for high ACoS keywords.
- Increase bids for profitable ones.
- Pause unprofitable campaigns.
Focus on Conversion Rate Optimization
Your ad performance depends on conversion rate.
Improve product photos, titles, reviews, and pricing.
Use Automatic and Manual Campaigns Together
Automatic campaigns discover new keywords.
Manual campaigns let you control high-performing ones.
Balancing both helps reduce ACoS efficiently.
ACoS vs TACoS vs ROAS
ACoS
Measures the cost of ads compared to ad sales only.
TACoS
Means Total Advertising Cost of Sales.
It includes both ad and organic sales to show your overall marketing efficiency.
ROAS
Means Return on Ad Spend.
It’s the inverse of ACoS and shows how much revenue you earn per dollar spent.
Example:
ACoS = 25% → ROAS = 4.
That means for every $1 spent, you earn $4 in ad sales.
ACoS Benchmarks by Category
While ACoS varies, here are average benchmarks:
| Category | Average ACoS |
|---|---|
| Home & Kitchen | 25% |
| Beauty & Personal Care | 22% |
| Electronics | 30% |
| Clothing & Accessories | 28% |
| Toys & Games | 20% |
| Books & Stationery | 15% |
These are general references. Your actual ACoS depends on competition, pricing, and strategy.
How to Improve ACoS Through Better Targeting
Better targeting equals better results.
- Use long-tail keywords with clear purchase intent.
- Analyze search term reports weekly.
- Add negative keywords to block wasteful traffic.
- Group campaigns by product and match type.
- Track each keyword’s conversion rate before adjusting bids.
Targeting is the foundation of a profitable Amazon PPC campaign.
Using ACoS to Set Campaign Goals
Your ACoS goal depends on your campaign type:
- Product launch: Accept higher ACoS (30–40%) to gain visibility and reviews.
- Profit phase: Target ACoS below 25%.
- Brand awareness: Focus on reach rather than low ACoS.
Align your ACoS target with your strategy. Short-term losses can create long-term success if your organic ranking improves.
Common Mistakes Sellers Make with ACoS
Many sellers misunderstand ACoS. Avoid these mistakes:
- Thinking low ACoS is always better.
- Ignoring total profit margin.
- Not tracking TACoS alongside ACoS.
- Forgetting negative keywords.
- Setting bids without reviewing data.
Smart sellers use ACoS as a guide, not a rule.
ACoS Optimization Tools
Several Amazon PPC tools help track and reduce ACoS:
- Sellexio: for complete Amazon ad management insights.
- SellerApp: keyword and ACoS tracking.
- AdBadger: ACoS automation and optimization.
- Scale Insights: AI-driven PPC control.
Using tools saves time and keeps campaigns profitable.
How to Track ACoS Performance
- Open Amazon Seller Central.
- Go to Advertising / Campaign Manager.
- Check the ACoS column for each campaign.
- Export reports to compare weekly trends.
- Adjust bids, keywords, and budgets as needed.
Regular tracking ensures stable performance and controlled spending.
Key Takeaways
- ACoS = Ad Spend ÷ Ad Sales × 100.
- Lower ACoS = Higher efficiency.
- A good ACoS is usually under 25%, depending on margins.
- Always calculate break-even ACoS before setting goals.
- Optimize keywords, listings, and bids to control ACoS.
- Use both ACoS and TACoS for a full picture of ad success.
FAQs About ACoS
ACoS means Advertising Cost of Sales. It measures the percentage of ad spend compared to ad-attributed sales on Amazon.
A good ACoS is one below your break-even point. For most sellers, that’s between 15% and 25%.
ACoS = (Ad Spend ÷ Ad Sales) × 100. Example: $50 ÷ $200 = 25%.
It stands for Advertising Cost of Sales, a metric that measures ad efficiency.
Optimize listings, target high-intent keywords, use negative keywords, and adjust bids regularly.
Not always. Very low ACoS can mean limited reach or low sales volume. Balance ACoS with growth goals.
Conclusion
Understanding ACoS on Amazon is essential for every seller who runs ads. It shows exactly how much you’re spending to make sales and whether your campaigns are profitable.
A good ACoS isn’t about being the lowest it’s about being right for your profit margin and your goals. Track it, test it, and tweak it regularly. With proper optimization, ACoS can become your most powerful tool to scale your Amazon business profitably.