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What is ACOS on Amazon? A Simple Guide for New Sellers
PPC Tools Team
6 min read
3/29/2026
ACOS stands for Advertising Cost of Sales. It tells you how much you're spending on Amazon ads for every dollar of revenue those ads generate. The formula is simple: Ad Spend divided by Ad Revenue times 100. A 20% ACOS means you spent 20 cents to make every dollar of ad sales. This guide explains what ACOS means, how to set a target, and why a "good" ACOS depends entirely on your profit margins.
If you're just getting started with Amazon PPC, ACOS is probably the first metric you'll hear about and one of the most important numbers to understand. It stands for Advertising Cost of Sales, and it tells you how much you're spending on ads relative to how much revenue those ads are generating.
The formula is simple: ACOS = Ad Spend / Ad Revenue x 100
So if you spent $10 on ads and those ads generated $50 in sales, your ACOS would be 20%. That means for every dollar of ad revenue, you spent 20 cents on advertising.
Why ACOS Matters
ACOS is essentially your measure of ad efficiency. A lower ACOS means you're spending less to generate each sale, which generally means more profit. A higher ACOS means your ads are eating into your margins.
But here's what a lot of new sellers get wrong: a low ACOS isn't always good and a high ACOS isn't always bad. It depends on your goals.
If you're launching a new product, you might intentionally run a higher ACOS to get visibility, build sales velocity, and collect reviews. In that case, a 50% or even 80% ACOS might be acceptable because you're investing in the product's long term organic ranking.
If your product is established and you're focused on profitability, you'll want to bring that ACOS down closer to your profit margin. If your profit margin is 30%, any ACOS under 30% means you're making money on every ad sale.
How to Figure Out Your Target ACOS
💡 Pro Tip: Understanding your ACOS is the first step to profitable advertising. Our tools make it easy to track ACOS at the keyword level and optimize automatically.
Your target ACOS depends on your profit margin before ad spend. Here's a simple way to think about it:
Take your selling price, subtract Amazon's fees, subtract your product cost and shipping, and what's left is your pre-ad profit margin. If that margin is 35%, then a 35% ACOS means you're breaking even on ad sales. Anything below that is profitable.
Most sellers aim for an ACOS somewhere between 15% and 30%, but your number will be unique to your product and goals.
ACOS vs TACoS
You'll also hear about TACoS, which stands for Total Advertising Cost of Sales. While ACOS only looks at revenue from ad clicks, TACoS compares your ad spend to your total revenue including organic sales. This gives you a bigger picture view because good advertising should also boost your organic sales over time.
If your ACOS is steady but your TACoS is dropping, that's a great sign. It means your ads are driving enough momentum that your organic sales are growing faster than your ad spend.
The Challenge of Managing ACOS
Here's where it gets tricky for new sellers. ACOS isn't just one number you set and forget. Every keyword in your campaigns has its own ACOS, and they're constantly changing based on competition, bid amounts, conversion rates, and seasonality. Managing this across dozens or hundreds of keywords is where most sellers either spend hours in spreadsheets or just let things run unoptimized.
Tools like ppctools.net can simplify this by letting you set your target ACOS once and then automatically adjusting your bids keyword by keyword based on actual performance data, so you don't need to manually track all of this yourself.
💡 Pro Tip: Tracking both ACOS and TACoS gives you the full picture of your advertising performance. See how our dashboard breaks it all down for you.
Key Takeaways
- ACOS tells you how efficiently your ads are performing
- Your ideal ACOS depends on your profit margins and whether you're focused on growth or profitability
- Don't panic about a high ACOS during a product launch, but do keep an eye on it as your product matures
- TACoS gives you the bigger picture by including organic sales
- The real work is in optimizing individual keywords rather than just looking at campaign averages
Frequently Asked Questions
What does ACOS stand for on Amazon?
ACOS stands for Advertising Cost of Sales. It's the percentage of your ad revenue that you spent on advertising. For example, if you spent $10 on ads and earned $50 from those ad clicks, your ACOS is 20%.
Is a 30% ACOS good on Amazon?
It depends on your profit margin. If your profit margin before ad spend is 40%, then a 30% ACOS means you're profitable on every ad sale. If your margin is only 25%, a 30% ACOS means you're losing money. There's no universal answer because every product has different costs.
What is the difference between ACOS and TACoS?
ACOS measures ad spend as a percentage of ad revenue only. TACoS (Total Advertising Cost of Sales) measures ad spend as a percentage of your total revenue, including organic sales. TACoS gives you a bigger picture view of how advertising impacts your overall business.
How do I lower my ACOS on Amazon?
The most effective ways to lower ACOS are improving your listing's conversion rate (better images, title, and price), adding negative keywords to eliminate wasted spend, lowering bids on underperforming keywords, and increasing bids on keywords that convert well at a low ACOS. Regularly reviewing your Search Term Report is essential to this process.
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