Calculate your Advertising Cost of Sales (ACoS) with this free online calculator. Simply enter the required data points and click calculate. You’ll get an instant overview of your campaign ACoS as a result.
What is Advertising Cost of Sales (ACoS)?
The Advertising Cost of Sales (ACoS) is a term used by Amazon to measure the performance of your sponsored advertising campaigns. It describes ratio of your ad budget to your ad revenue.
ACoS has an impact on your profit margins, as you deduct your ACoS $2 from your profits $5 of your sales, generated from your ads $25. In this example, your resulting profit would be $3.
This also works as a percentage: If your profit margins are 35% and your ACoS is 30%, the final margin you’re left with is 5%.
As a result, your ACoS should never be lower than your profit margin, otherwise, you make a loss.
How to calculate ACoS?
Follow these four easy steps to calculate your Advertising Cost of Sales:
- Find out your total ad sales, e.g.,
$100. - Find out your total ad spend, e.g.,
$25. - Divide the total sales by your ad spend:
$25 ÷ $100 = 25. - Express it as a percentage:
4 * 100 = 25%.
The ACoS formula
The Advertising Cost of Sales formula is as follows: ACoS = total ad spend / total ad revenue. If you want to find out the break-even ACoS, at which your advertising costs are equal to your profit margin, take: ACoS Break-Even = Sales Price – Commission Fees – Cost of Goods Sold.
What is a good Advertising Cost of Sales value?
There is no single ‘good’ ACoS and your return will differ by industry. In other words, your benchmark depends on what products you sell and who your competitors are. As a rule of thumb, your ACoS should be at a maximum of 30%, but better at 25% or lower. The lower your ACoS, the better.
ACoS vs. ROAS
So what’s the difference between ROAS and ACoS? Both bring the revenue from ads and your total ad spend in relation to each other. While the ACoS measures the ratio of ad spend to your total ad revenue, the ROAS reflects the ratio of your ad revenue to your ad spend.
As such, both metrics measure each side of the same coin. Let’s say your total ad revenue is $100 and your total ad spend is $25. Your ACoS would be 25%, while your ROAS would be 400%.
If you want to learn more about Return on Ad Spend (ROAS), try my free ROAS calculator.