What is ACoS, and what is a good ACoS?

How is ACoS calculated?

Spend £250 on Sponsored Products and generate £1,000 of advertised sales, and your ACoS is 25%. The figure counts only sales Amazon attributes to an ad click within the attribution window, which is why it never matches your total sales.

A lower ACoS is not automatically better. An ACoS of 5% usually means bids are too low to win meaningful volume — profitable, but on almost nothing.

What is a good ACoS?

Any ACoS below your break-even. The break-even is the point where an advertised sale contributes exactly nothing, and it comes from your own numbers:

Where net revenue is the selling price with VAT stripped out, and contribution is what remains after cost of goods, inbound shipping, the Amazon referral fee and the FBA fee.

The profit and break-even ACoS calculator will work yours out from your own figures.

Why do category benchmarks mislead?

Because ACoS is a ratio, and the denominator is your price while the numerator is an auction cost. Two sellers in the same category with the same ACoS can have completely different outcomes if their margins differ.

A quoted "average ACoS for Home & Kitchen" tells you what other people are spending, not what you can afford. It is a useful sanity check on whether your bids are wildly out of line, and nothing more. Anyone setting your target from a benchmark has skipped the only step that matters.

What is the difference between ACoS, TACoS and ROAS?

TACoS is the number to watch at account level. A falling TACoS with flat ACoS means organic sales are growing underneath the advertising, which is what good work looks like. A rising TACoS means the account is becoming more dependent on paid traffic, even if ACoS looks healthy.

The reason TACoS moves at all is that advertising produces sales, and sales velocity feeds organic rank — the mechanism is set out in how Amazon's ranking algorithm works. That is also why a campaign generating clicks without conversions is worse than useless: it spends money and depresses the conversion rate that rank depends on. What a well-structured account looks like is covered on the PPC management page.

What if your ACoS is too high?

Four causes, in the order worth checking:

1. Wasted spend on non-converting terms. Usually the largest single item. Pull the search term report and total the spend that produced no sales.
2. Brand terms mixed into the blended figure. Brand defence converts at several times the rate of everything else; leaving it in flatters a struggling account and hides the real problem.
3. A listing that does not convert. If clicks arrive and nobody buys, advertising is not the problem — the destination is. Fix that first.
4. Bids set above what the term is worth. The last thing to adjust, not the first.

Our free PPC audit tool handles the first two in about a minute from a pasted search term report.

Does VAT change your break-even ACoS?

Yes, and it is the single most common error in UK break-even calculations. Amazon advertising costs are compared against the sales figure Amazon reports, which is VAT-inclusive for a VAT-registered seller — but the VAT portion is never yours. Working from the gross price overstates your margin and therefore your break-even, so the target ACoS you set is one you cannot actually afford.

The order that gets it right:

1. Strip VAT from the selling price to get net revenue — at the standard 20% rate, that is the gross price divided by 1.2, though some categories are zero-rated or reduced.
2. Subtract cost of goods, inbound shipping, the referral fee and the FBA fee from net revenue.
3. Divide what remains by net revenue. That percentage is your break-even ACoS.

On a £24 item at the standard rate, net revenue is £20, not £24. If your costs are £13, contribution is £7 and break-even ACoS is 35% of net revenue — whereas the same sum run on the gross price suggests 46%. Advertising at 40% would look comfortably profitable and would in fact be losing money on every sale.

Which rate applies is a question for HMRC's rates guidance rather than for an advertising tool, and if you are below the registration threshold the calculation is simply the gross price — see when to register for VAT and our fuller guide to Amazon UK VAT for sellers. The profit calculator handles the VAT step for you, which is mostly why it exists.

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Last reviewed 18 July 2026. We update articles in place rather than republishing at a new URL, so the link you have keeps working.