Many Amazon sellers chase a low ACOS (Advertising Cost of Sale), thinking it’s the golden ticket to profitability. But here’s the truth: a “low” ACOS doesn’t always mean a healthy business.

In fact, without understanding your breakeven ACOS, you could be scaling campaigns that are silently eroding your profit margin.

What is ACOS and Why It’s Misleading Alone

ACOS = (Ad Spend ÷ Sales) × 100

This simple formula shows how much you’re spending in ads to earn one dollar in sales. For example, if you spend $10 to make $100 in sales, your ACOS is 10%.

Sounds good, right? But not so fast.

ACOS doesn’t account for your profit margin. If your margin is slim, even a “low” ACOS might mean you’re still losing money on each sale.

The Metric Most Sellers Ignore: Breakeven ACOS

Breakeven ACOS is the maximum ACOS you can afford before a sale stops being profitable.

It’s your profit guardrail go over it, and you’re scaling into losses.

Breakeven ACOS Formula:

Breakeven ACOS = (Net Profit ÷ Selling Price) × 100

Example:

• Selling Price: $40

• Net Profit (after COGS, fees, etc.): $10

• Breakeven ACOS = (10 ÷ 40) × 100 = 25%

If your ACOS is above 25%, you’re losing money on every sale, even if it feels like your ad is performing well.

Note: This formula assumes accurate profit calculations. Be sure to include FBA fees, shipping, and discounts.

Why Breakeven ACOS Should Be Your Real KPI

Focusing on breakeven ACOS allows you to:

Make scaling decisions based on profit, not vanity metrics
Set smart bid limits and avoid overspending
Know exactly which campaigns need optimization or pausing
Align ad strategy with your long-term brand profitability.