Break-even ACoS is the advertising cost of sales at which an ad-attributed order makes neither profit nor loss. It equals your profit margin before advertising, as a percentage of selling price. Any ACoS below it leaves profit on each ad order; any ACoS above it means the ad is paid for out of margin.
Start with what one unit earns before ads. Take the selling price, subtract the landed cost of the product, and subtract everything the marketplace charges on that order: referral fee, closing fee, shipping or FBA fee, and the GST on those fees if you cannot claim it back. What is left is the pre-ad profit. Divide it by the selling price to get the margin as a percentage. That percentage is the break-even ACoS.
Worked example: a kitchen product sells at ₹999 on Amazon India. The product costs ₹400 landed, and Amazon fees on the order come to ₹250. Profit before ads is ₹999 - ₹400 - ₹250 = ₹349. Divide by ₹999 and you get 35%. If ad spend on that order is ₹349 (ACoS 35%), profit is zero. At ACoS 20% the order still makes ₹149; at ACoS 45% it loses ₹100.
The same number works on Flipkart, which reports ROI (ad revenue divided by ad spend) rather than ACoS. Break-even ROI is simply 1 divided by break-even ACoS: 1 / 0.35 = 2.86. A Flipkart ROI below 2.86 on this product loses money.
Break-even ACoS turns a vague target into a line you can defend. Sellers often set a target ACoS of 20% or 30% because it sounds sensible, without knowing whether that is above or below their margin. A 30% target on a product with a 25% margin loses money on every ad order and looks fine on the dashboard.
It also explains why one ACoS is not good or bad on its own. A 40% ACoS is excellent on a product with a 60% margin and ruinous on one with 20%. Judge each SKU against its own break-even, not against a category average.
Blooprint's glossary on blooprint.in covers ACoS itself.
Enter price, product cost and fees to find the ACoS at which an ad order makes no profit.
Learn more →Enter ad spend and ad sales to get ACoS and ROAS in one step.
Learn more →Flipkart reports ROI, not ACoS. How to convert one into the other.
Learn more →Filter every keyword by ACoS, CVR and spend, then change bids in bulk on Amazon India.
Learn more →It is the ACoS at which an advertised order makes no profit and no loss. It equals your profit margin before ad spend, expressed as a percentage of the selling price.
Break-even ACoS = (selling price - product cost - marketplace fees) / selling price x 100. For a ₹999 product with ₹400 cost and ₹250 fees, that is ₹349 / ₹999 = 35%.
A good ACoS sits below your break-even by enough to absorb returns. If break-even is 35%, a target of 25% to 30% is typical for an established product. New launches may run above it on purpose for a few weeks.
Divide 1 by the break-even ACoS as a decimal. A 35% break-even ACoS equals a break-even ROAS or Flipkart ROI of 2.86. Below that multiple the ad order loses money.
Include GST on marketplace fees only if you cannot claim it as input credit. Ad spend itself carries 18% GST in India, which most registered sellers claim back, so it is usually left out of the calculation.
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