Breakeven ACOS: the number that tells you when your Amazon ads stop making money

Breakeven ACOS is the advertising cost of sales at which an Amazon sale stops making you money. Most sellers can quote their ACOS from memory. Far fewer can quote the ceiling it has to stay under, and that ceiling moves every time a fee changes, a price changes or the calendar reaches October. This post builds your breakeven ACOS from the fees Amazon publishes for UK sellers, shows where VAT takes a slice that most calculations miss, and works through what the Q4 fee changes do to the number.

What breakeven ACOS measures

Amazon defines ACOS as ad spend divided by ad revenue, multiplied by 100 (Amazon Ads guide to advertising cost of sales). Spend £30 on ads that bring in £100 of sales and your ACOS is 30%. The same guide ties the limit directly to margin: break-even ACOS is linked to your profit margin, and your ACOS has to sit below that margin for the advertising to stay profitable.

The margin that matters here is the margin before advertising. That is what is left of the sale price once you have paid for the product, paid Amazon and set aside the tax on the sale. Divide it by the sale price, multiply by 100, and you have your breakeven ACOS. A campaign running below that figure makes a profit on each ad-driven sale. A campaign running above it pays for the privilege of selling your stock.

Our general guide to Amazon ACOS covers the definitions of ACOS, ROAS and TACOS. This piece is about the ceiling itself, built line by line from the figures on Amazon’s UK pricing page and FBA rate card, so you can recalculate it whenever one of those figures moves.

The five deductions behind your breakeven ACOS

The first deduction is landed cost: cost of goods, inbound freight to the fulfilment centre and any import duty. This is your number and nobody else can give it to you. Use the landed cost of the stock you are selling now, not the quote from two orders ago.

The second is VAT, and it is the deduction most breakeven calculations skip. The UK standard rate is 20% on most goods and services (GOV.UK VAT rates). If you are VAT registered and your product is standard-rated, the price the customer pays includes that 20%, which means one sixth of the price belongs to HMRC. On a £25 sale that is £4.17 that was never your margin. A calculation that treats the full £25 as revenue overstates your breakeven ACOS by that £4.17 divided by the price, which is almost 17 percentage points.

The third is Amazon’s referral fee. Amazon charges a percentage of the total price, including item price, shipping and any gift-wrapping charge, or a minimum amount, whichever is greater. The minimum is 25p per item (Amazon UK seller pricing page). The percentage depends on your category and, in several categories, on your price. Home products pay 8% at or below £20 and 15% above it. Beauty, health and personal care pays 8% up to £10 and 15% above. Clothing and accessories pays 5% at or below £15, 10% between £15 and £20, and 15% above £20. Pull your own category’s band from the pricing page. The price bands mean two products in the same category can pay very different rates, so a flat 15% across a whole catalogue will be wrong for some of them.

The fourth is the FBA fulfilment fee, which Amazon describes as a flat fee per unit based on product type, dimensions and weight. The current UK rate card, effective from 1 July 2026, charges £3.00 at the standard rate for a small parcel (up to 35 x 25 x 12 cm) weighing up to 400g, and £3.06 for a standard parcel (up to 45 x 34 x 26 cm) weighing up to 900g (Amazon FBA rate card, July 2026). Since 17 April 2026 Amazon has also applied a 1.5% fuel and logistics surcharge to fulfilment fees, so that £3.00 small parcel fee comes to £3.05 per unit once the surcharge is added. Products priced at £20 or less including VAT in most categories fall under Low-Price FBA rates instead, where the same small parcel costs £2.70.

The fifth is storage. Amazon charges standard-size storage in most categories at £0.76 per cubic foot per month from January to September and £1.51 from October to December (Amazon UK seller pricing page). For a unit that sells within a few weeks this is pennies. For slow stock it compounds every month the unit sits there, and our breakdown of Amazon Q4 storage fees covers the surcharges that sit on top of the base rate.

A worked breakeven ACOS example on a £25 product

The table below runs one product through all five deductions twice: once at September rates and once at the rates that apply in November. The product is a home item priced at £25 including VAT, sold by a VAT-registered seller, shipped as a small parcel under 400g and taking up 0.1 cubic feet of space for one month. The £7.00 landed cost and the 0.1 cubic feet are illustrative figures, not client data. Every fee comes from the Amazon sources linked above.

In September this product can carry an ACOS of up to 27.8% before its ads start losing money. Leave VAT out of the sum and the same product appears to have £11.12 of margin and a breakeven ACOS of 44.5%. A seller working from that figure would happily run campaigns at 35% and believe they were profitable, when every ad-driven sale was costing them money.

Price bands change the picture as well. Drop the same product to £20 and three lines move at once. The referral fee falls from 15% to 8% because Home products pay the lower rate at or below £20. The FBA fee falls to the Low-Price rate of £2.70, or £2.74 with the surcharge. VAT falls to £3.33. In November the margin before advertising comes to £5.18 and the breakeven ACOS to 25.9%. The price is £5 lower but the margin is only £1.58 lower, because Amazon’s own fee bands absorb most of the difference. Anyone pricing just above £20 in a banded category should run this comparison before Q4 starts.

Why your breakeven ACOS drops in Q4

Two fees rise in the final quarter and neither has anything to do with your advertising. Storage for standard-size items almost doubles from 1 October, from £0.76 to £1.51 per cubic foot per month. Then from 15 October 2026 to 14 January 2027, Amazon adds a festive peak fulfilment fee for UK sellers, averaging £0.12 per parcel item and £0.07 per large and extra-large envelope item (Amazon peak season 2026 announcement). The same announcement says the peak fee does not apply to oversize items, Low-Price FBA items or items delivered to buyers in other EU countries.

In the worked example those two changes take the breakeven ACOS from 27.8% to 27.0%. Less than a point sounds trivial until you apply it to a campaign that was running at 27.5% in September and was just profitable. From mid-October that campaign loses money on every sale without a single bid changing. Slow sellers take a bigger hit, because a unit that sits for three months pays the Q4 storage rate three times before it sells.

The routine is simple. Take your five best-selling products and work out the breakeven ACOS for each at current rates, then again at Q4 rates. Open Campaign Manager, pull the ACOS for each product’s campaigns over the last 30 days, and put the two numbers side by side. Any campaign sitting above its Q4 breakeven is losing money on each sale it wins, and those are the campaigns to cut bids on first. Our Amazon PPC audit walks through finding the search terms inside those campaigns that are spending without converting.

Some campaigns should run above breakeven on purpose. A product launch buying its first reviews, or a hero product defending its rank through Black Friday, can justify it. The difference is that a deliberate overspend has a budget and an end date. An ACOS target set once and never compared to the fees is how a profitable account turns unprofitable in October without anyone noticing until the settlement report arrives.