Formula
Target ACoS = break-even ACoS − contribution margin to retain
Worked example
A $40 product has $10 in fees and $14 in landed cost. Its $16 contribution before ads gives it a 40% break-even ACoS. If you want to keep 10% of the sale price after advertising, subtract 10 percentage points: the target is 30% ACoS.
At that target, advertising can use $12 per attributed $40 sale. That leaves $4 after the listed costs and ads, before any unmodeled expenses. Keeping 10% here means 10% of sales revenue, not 10% of the original $16 contribution. The distinction matters when you enter your target into a calculator.
Why it matters for profit
A target connects bidding decisions to a product’s actual economics. Setting the same percentage for products with different margins can leave one profitable and another losing money. A target also needs enough room for costs that sit outside the simplified model; reaching it is not a guarantee of net profit.
Treat the percentage as a planning input rather than an outcome the platform must deliver. Conversion rate, click cost and order value can all change. If your break-even ACoS is 20%, retaining a 10% margin leaves a 10% target, not the 30% target used for the higher-margin example.
Check it on your numbers
Use Catalog Profit Check.