Break-even ACOS calculator.
Break-even ACOS is the advertising cost at which a sale contributes exactly zero. Spend less than that and the sale earns; spend more and it costs you. It is also — and this is the part almost nobody is told — the same number as your contribution margin.
What the customer actually pays, after coupons and discounts. Not the MRP.
Landed cost — purchase or manufacture, plus inbound freight and duty.
Referral or commission, closing or collection, fulfilment and storage. Everything except advertising.
Anything you pay to move the unit that is not already inside the fees above.
Share of orders that come back. Lowers the ACOS you can afford, before reverse logistics is even counted.
Optional. Add it to see what an advertised sale currently keeps.
39.11%
Spend more than this on advertising and the sale costs you money.
Healthy
Profitable with enough headroom to absorb a returned order or a bad week.
How it is worked out.
Break-even ACOS = (Selling Price − Product Cost − Fees − Shipping) ÷ Selling Price × 100
- Selling Price
- What the customer actually paid, after coupons and discounts. Not the MRP, and not the price before a promotion you were running.
- Product Cost
- What the unit costs you landed — manufacture or purchase, plus inbound freight and duties.
- Fees
- Every per-unit marketplace charge except advertising: referral or commission, closing or collection fee, fulfilment, and storage apportioned per unit.
- Shipping
- Anything you pay to move the unit that is not already inside the marketplace's fee.
The right-hand side of that equation is the definition of contribution margin. Break-even ACOS and contribution margin are not two related numbers — they are one number answering two questions.
With real numbers.
One ₹1,299 unit, fulfilled by the marketplace.
| Selling price (after discount) | ₹1,299 |
|---|---|
| Product cost, landed | ₹420 |
| Marketplace fees (referral + closing + fulfilment) | ₹286 |
| Shipping paid separately | ₹85 |
| Contribution per unit | ₹508 |
508 ÷ 1,299 × 100 = 39.11% break-even ACOS
₹508 of every ₹1,299 sale is yours before advertising. Spend exactly ₹508 winning that sale and you have worked for nothing. At the 28.75% ACOS from the earlier example you keep 10.36% — about ₹135 a unit.
What the number means.
The useful reading is not the break-even number itself but the gap between it and your actual ACOS. That gap, in percentage points, is your margin after advertising.
| Range | Verdict | What it means |
|---|---|---|
| Around 20% — well below | Keeps about 19% | Roughly ₹247 a unit. Comfortable, and usually a signal there is volume you are not buying. |
| Around 30% — the example campaign | Keeps about 9% | Roughly ₹120 a unit. A working campaign with enough room to absorb the odd return. |
| 36% — just below break-even | Keeps about 3% | Around ₹40 a unit. One returned order erases a dozen sales, and a small fee revision erases the rest. |
| 39.11% — at break-even | Keeps nothing | The sale happens and the money does not. Worth it only when the sale buys something else: rank, a review, a repeat customer. |
| Above 39.11% | Pays for the privilege | Every advertised sale costs you. A defensible launch strategy for a fixed period, and a slow bleed if it is nobody's decision. |
Because break-even ACOS is contribution margin, anything that changes your margin changes it: a fee revision, a discount, a freight increase, a switch from self-ship to marketplace fulfilment. It is not a number you calculate once.
Where this goes wrong.
- 01
Using MRP instead of the price the customer paid
Coupons, promotions and marketplace-funded discounts all move the real selling price. Computing break-even on MRP gives you permission to spend more than the sale can carry.
- 02
Ignoring returns
In categories running 25% returns, one in four shipments earns nothing and often costs reverse logistics on top. A break-even ACOS computed on a perfect order is optimistic by roughly the return rate, and apparel is the category where this matters most.
- 03
Getting GST on fees wrong in either direction
Marketplace fees attract 18% GST. A registered seller reclaims that as input credit, so the fee net of GST is the true cost; if you are not registered, or the credit is stuck, you genuinely pay it. Decide which case you are in — both mistakes are common and they move break-even by several points.
- 04
Using gross margin instead of contribution margin
Gross margin usually stops at product cost. Break-even ACOS needs everything that varies per unit — fees, fulfilment, shipping — because advertising competes with all of it for the same rupees.
- 05
Setting one break-even for the whole catalogue
Referral rates differ by category, fulfilment differs by size band, and your margins differ by SKU. A single account-wide target ACOS overspends on your thin products and underspends on your best ones.
The rest of the set.
Where the real numbers live.
- Amazon Settlement Calculator
The fee side of this calculation, itemised: referral, closing, FBA, storage and returns for a given price and category.
- Flipkart Settlement Calculator
The same for Flipkart — commission, fixed fee, shipping, collection and GST, so the fees you type in here are real ones.
- Ecommerce Margin Calculator
Break-even ACOS is per unit. This is the same arithmetic for a whole month, with advertising and returns included.
Break-even is per SKU. So is the overspending.
One account-wide target ACOS overspends on thin products and starves the good ones. The Advertised Product module reads your export SKU by SKU, so you can set the target against each product's own break-even instead of an average.
Questions people actually ask.
Is break-even ACOS the same as my profit margin?
It is the same as your contribution margin — selling price minus product cost, fees and shipping, over selling price. It is not the same as net margin, which also carries overheads that do not vary per unit. The identity with contribution margin is the useful part: if you know one, you already know the other.
Should I target my break-even ACOS?
No. Break-even is the ceiling, not the target. Aim meaningfully below it so a return, a fee revision or a slow week does not push you through it. Something in the region of 60–80% of break-even is a common working target — for a 39% break-even, roughly 24–31%.
How do returns change break-even ACOS?
They lower it. If a fifth of orders come back, the contribution you keep per shipped unit is roughly a fifth smaller before you count reverse logistics — so the ACOS you can afford falls by about the same proportion. In high-return categories this is the difference between a target that works and one that quietly loses money.
Should GST be included in break-even ACOS?
GST you collect from the customer is not revenue and does not belong in the selling price you use here. GST charged on marketplace fees is a cost only if you cannot reclaim it — registered sellers take input credit and should use the fee net of tax. Getting this backwards moves break-even by several percentage points.
Does break-even ACOS change when I change price?
Yes, and not proportionally. Product cost and most shipping stay flat while referral fees scale with price, so raising the price usually raises break-even ACOS — one of the few levers that gives advertising more room without touching a bid.