How to convert ROAS to ACoS
ACoS % = 100 ÷ ROAS
ROAS = 100 ÷ ACoS %
Break-even ACoS % = Gross margin %
The last formula is the useful shortcut: your break-even ACoS equals your gross margin. If you keep 35% of each sale as gross profit, you can spend up to 35% of revenue on ads before losing money.
Worked example
Your Google Shopping campaign has a ROAS of 4.0, and your gross margin is 35%.
| Metric | Calculation | Result |
|---|
| ACoS | 100 ÷ 4.0 | 25% |
| Break-even ACoS | Equal to margin | 35% |
| Break-even ROAS | 100 ÷ 35 | 2.86 |
At a 25% ACoS, you spend 25 cents in ads for every dollar of sales and keep about 10 cents of gross profit after ads (35% − 25%). The campaign is profitable. If ACoS rose above 35%, or ROAS fell below 2.86, you would lose money on every ad-driven sale.
Quick conversion table
| ROAS | ACoS |
|---|
| 2.0 | 50% |
| 2.5 | 40% |
| 3.0 | 33.3% |
| 4.0 | 25% |
| 5.0 | 20% |
| 8.0 | 12.5% |
Note the direction: higher ROAS is better, lower ACoS is better.
Interpreting your result
Compare your current ACoS with your break-even ACoS:
- ACoS well below break-even: each sale makes a solid profit after ads. You may have room to bid higher and gain volume.
- ACoS close to break-even: you are covering product cost and ads, but little else. Overhead, returns and fees may push you into a loss.
- ACoS above break-even: ad-driven sales are losing money at the gross level, unless you deliberately accept that for new customers or product launches.
A "good" ACoS or ROAS is therefore relative to your margin, not a fixed industry number. A 30% ACoS is excellent for a product with a 60% margin and a loss for one with a 25% margin. For a deeper look at ROAS targets, see what is a good ROAS.
ACoS vs TACoS
Amazon sellers also use TACoS (total advertising cost of sales): ad spend divided by total revenue, including organic sales. TACoS shows how dependent the business is on advertising overall. Google Ads has no built-in equivalent, but you can calculate it the same way using total store revenue.
- Set targets from margin, not habit. Calculate break-even ACoS or ROAS per product group, then set a target with room for profit.
- Translate before comparing. Convert Amazon ACoS to ROAS (or vice versa) before deciding which channel performs better.
- Account for platform fees. Amazon referral and fulfillment fees reduce the margin left for ads. Use the margin for each channel, not one blended number.
- Use the right bidding inputs. In Google Ads, Target ROAS is entered as a percentage: a 4.0 ROAS is a 400% target. Find your floor with the break-even ROAS calculator.