Amazon Profitability Calculator
See your true contribution margin after referral fees, FBA fees, shipping, and advertising spend - not just the number Amazon shows you.
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Four terms come up in every Amazon profit conversation. Here is what each one means and how it connects to the calculator above.
Contribution margin
What is left of each sale after product cost, Amazon fees, shipping and advertising. It is the number that pays for everything else in the business.
Break-even ACoS
Your profit margin before ad spend, as a percentage of the sale price. Spend above it and each ad-driven sale loses money.
ACoS and ROAS
ACoS is ad spend divided by ad-attributed sales. ROAS is the inverse (sales divided by spend), so a 25% ACoS is a 4.0 ROAS.
TACoS
Ad spend divided by total sales, including organic. It shows whether advertising is growing the whole business and not just buying sales you would have earned anyway.
A product that sells for $30
Here is the maths behind break-even ACoS, using a simple example you can reproduce in the calculator.
| Cost per unit | Amount |
|---|---|
| Sale price | $30.00 |
| Cost of goods | $8.00 |
| Referral fee (15%) | $4.50 |
| FBA fulfilment fee | $5.50 |
| Inbound shipping | $1.00 |
| Profit before ads | $11.00 (36.7% of price) |
Profit before ads is $11.00, which is 36.7% of the $30 price. That makes break-even ACoS 36.7%. Here is what happens as ACoS rises:
| ACoS | Ad cost per unit | Profit per unit | Margin |
|---|---|---|---|
| 20% | $6.00 | $5.00 | 16.7% |
| 30% | $9.00 | $2.00 | 6.7% |
| 36.7% (break-even) | $11.00 | $0.00 | 0.0% |
| 45% | $13.50 | -$2.50 | -8.3% |
The same logic applies to TACoS. If you spend $5,000 on ads that drive $20,000 of ad sales (25% ACoS) and your total sales are $50,000, your TACoS is 10%. As organic sales grow, TACoS falls even when ACoS stays flat. This is an illustrative example, not a client result.
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Profitability calculator: your questions
Break-even ACoS is the highest advertising cost of sales at which a product still makes zero profit. It equals your profit margin before ad spend, as a percentage of the sale price. Running ads above it loses money on each ad-driven sale.
ACoS is ad spend divided by sales attributed to those ads. TACoS is ad spend divided by your total sales, including organic. A falling TACoS while sales grow usually means advertising is helping organic rank, which ACoS alone does not show.
There is no single good number. It depends on your margin, your goals and the product's lifecycle. A product with a 40% margin before ads can run a higher ACoS than one with a 15% margin, and a launch can accept a higher ACoS than a mature product.
Include everything that comes out of each sale: product cost, referral fee, FBA fulfilment fee, inbound shipping, storage and expected returns. Leaving any out makes your margin look better than it is.
Fix conversion first, because a better listing lowers ACoS on the same traffic. Then remove wasted spend with negative keywords and restructure campaigns by match type. Our guide on reducing ACoS walks through the steps.
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