Guide
Break-even ACoS Guide
Break-even ACoS shows the highest ad cost percentage you can afford before a sale becomes unprofitable. It is useful for Amazon PPC, TikTok Shop ads and any ecommerce campaign where revenue can be tied to ad spend.
Formula
Break-even ACoS = gross profit before ads / selling price. Target ACoS should be lower than break-even ACoS because sellers still need profit for overhead, tax and reinvestment.
Example
If a product sells for $30 and non-ad costs are $18, gross profit before ads is $12. Break-even ACoS is 40%. If you want a 15% target margin, your working ACoS target should be lower.
Common mistakes
Do not confuse break-even with target. Break-even means zero contribution profit. A healthy campaign usually needs room below break-even.