What is Break-Even ACoS?

Break-even ACoS is the point where advertising costs exactly what the sale contributes. Spend below it and the order is profitable. Spend above it and you are buying revenue with your own margin.

How it works

Every sale carries a contribution margin: the price, less Amazon's fees, less the cost of the goods. Break-even ACoS expresses that margin as a share of price, because ACoS is measured on the same base.

Break-Even ACoS = Contribution Margin ÷ Price
                = (Price − Amazon Fees − COGS) ÷ Price

Worked example

Suppose a product sells for £30, Amazon's referral and fulfilment fees come to £8, and the landed cost of the unit is £7.

• Contribution margin = 30 − 8 − 7 = £15
• Break-even ACoS = 15 ÷ 30 = 50%

At 50% ACoS that advertised order breaks even exactly. Below it you keep the difference.

No cost on file means no break-even

Run the same arithmetic on a product with no cost recorded and it returns the gross margin after Amazon's fees instead. That figure sits far above any real threshold, and it reads as permission to bid there. Treat a missing cost as unknown: return no break-even and say why, rather than a confident number. Treating it as zero is worse, because a zero threshold classifies every advertising pound as waste.

Break-even is a property of a unit's economics, so it belongs to the ASIN. Averaging it across a catalogue where some products carry no cost divides margin by revenue that carries no cost at all, and the blend reads higher than the truth. Compute it on the priced products only, report how much of the revenue that covers, and weight by revenue when one headline number is needed.

Mind the basis

Amazon attributes advertised sales at order time and does not restate them when a buyer later returns the item. A break-even threshold has to sit on the same basis as the ACoS it is compared against. Hold the money amount of margin fixed and swap the denominator from revenue before refunds to revenue after refunds, and the threshold rises by 1 ÷ (1 − refund rate). The two agree only on a product that never takes a return, so whichever basis you choose, state it beside the number.

A ceiling, not a target

Break-even tells you where profit ends, not where to aim. Shurq expresses targets relative to it rather than as absolute numbers: brand defence well below it, core non-brand terms at or near it, and deliberate ranking pushes above it for a bounded period. The scaling factor is called profit retention.