Formula
Contribution before ads = price − Amazon fees − landed cost
Break-even ACoS = contribution before ads ÷ price × 100
Worked example
In Lesson 1, Product A sells for $40, with $10 in Amazon fees and $14 in landed cost. It has $16 left before ads. Divide $16 by $40 and its break-even ACoS is 40%. At $16 of ad spend for one attributed sale, the simplified contribution after ads is zero.
Product B has the same price and fees, but landed cost is $22. Only $8 remains before ads, so its break-even ACoS is 20%. At 25% ACoS, Product A retains $6 per attributed sale while Product B loses $2. A shared account target would miss that difference.
Why it matters for profit
Break-even is a ceiling under the assumptions, rather than a profit target. If you want money left after advertising, choose a target below it. Include the variable costs relevant to your decision; omitted returns, discounts or other expenses can make an apparently safe ceiling too high.
This calculation is a contribution model, not a complete business profit statement. It does not prove sales are incremental, and overhead or management fees may still need to be covered. Recalculate when price, fees or landed cost changes, using consistent units and the current product’s costs.
Check it on your numbers
Use Catalog Profit Check.
Read the worked lesson: Find the ACoS your product can afford.