What is ACoS on Amazon? (And How to Improve It)

ACoS — Advertising Cost of Sales — is the most important metric for Amazon PPC sellers. It tells you how much you spent on advertising to generate each pound or dollar of ad-attributed sales. Get it right and your ads pay for themselves. Get it wrong and advertising spend quietly destroys your margins. This guide explains what ACoS means, how to calculate it, what a good ACoS looks like for your business and how to reduce it.

• 1. What is ACoS?
• 2. How to Calculate ACoS
• 3. What is a Good ACoS?
• 4. ACoS vs TACoS
• 5. How to Improve Your ACoS
• 6. Best Tools for Managing ACoS

What is ACoS?

ACoS stands for Advertising Cost of Sales. It is the ratio of your Amazon ad spend to the revenue generated by those ads, expressed as a percentage.

Example: You spend £50 on Sponsored Products. Those ads generate £250 in sales. ACoS = 50 ÷ 250 × 100 = 20%. For every £1 of ad-attributed revenue, you spent 20p on advertising.

How to Calculate ACoS

Amazon calculates ACoS automatically in Seller Central and in any PPC management tool. Understanding the formula helps you set targets before launching campaigns.

Break-Even ACoS

Break-even ACoS is the point where ad spend exactly equals your profit margin — no profit, no loss. If your product sells for £30 and total costs are £20, your margin is 33%. Break-even ACoS is 33%. Any ACoS below this means advertising is profitable.

Target ACoS

Target ACoS is your desired ACoS based on profit goals. If break-even ACoS is 33% and you want 15% net margin after advertising, target ACoS = 33% − 15% = 18%.

What is a Good ACoS?

There is no universal good ACoS — it depends entirely on your margin. A 30% ACoS might be excellent for a high-margin product and catastrophic for a low-margin one. Always calculate your break-even ACoS first.

ACoS vs TACoS

ACoS only measures ad spend against ad-attributed sales. TACoS (Total Advertising Cost of Sales) divides ad spend by total revenue including organic sales — giving a more accurate picture of advertising's true cost relative to your whole business.

A high ACoS with a low TACoS often means advertising is driving organic rank improvement — expensive in isolation but generating organic sales that justify the cost. Track both metrics together.

How to Improve Your ACoS

1. Add Negative Keywords

Review search term reports weekly. Identify terms with spend but zero or low conversions and add them as negatives. This is the fastest way to cut wasted spend and lower ACoS.

2. Reduce Bids on Underperforming Keywords

Keywords with ACoS significantly above target should have bids reduced gradually — 15–25% at a time — rather than paused immediately. Monitor whether conversion improves at lower positions.

3. Increase Bids on Profitable Keywords

Keywords with ACoS well below your target are underinvested. Increasing bids wins more impressions at a profitable rate — improving total revenue without raising ACoS proportionally.

4. Use Dayparting

Most accounts have peak and off-peak conversion hours. Running ads at full budget during low-converting hours wastes spend. Dayparting reduces bids or pauses campaigns during those periods.

5. Improve Your Listing

ACoS is determined by both bid cost and conversion rate. Better images, a stronger title and clearer bullet points convert more of the clicks you pay for — lowering ACoS without touching bids.

Best Tools for Managing ACoS

Managing ACoS manually in Seller Central is unworkable at scale. Dedicated Amazon PPC tools automate bid adjustments, negative keyword management and dayparting based on ACoS targets.

Frequently Asked Questions