Break Even ACoS for Merch by Amazon: the table for 5 price points

Your break even ACoS on a Merch by Amazon shirt is your royalty divided by the list price. A $19.99 shirt paying about $5 breaks even at 25% ACoS, and closer to 23% once returns are counted.

That one number tells you whether a campaign is making or losing money on royalty. It also changes a lot with price, which is why a single ACoS target across a whole Merch account is almost always wrong for some of your designs.

Below is the formula, a table for five price points, the after-returns version, and how to turn it into a bid you can actually set.

What break even ACoS means on a royalty product

ACoS is ad spend divided by ad sales. Amazon's own ACoS guide puts it plainly: to stay profitable, your ACoS needs to be lower than your profit margin. That margin is your break even ACoS.

Most break-even guides then subtract cost of goods, FBA fees and shipping to find the margin. A Merch seller has none of those to subtract. Amazon prints and ships the shirt and pays you a royalty.

So the formula is shorter:

break even ACoS = royalty ÷ list price

The catch is the denominator. Amazon reports ad sales at the full list price, but you only keep the royalty. If you're new to the metric, what ACoS really measures explains why the ACoS a seller of physical goods calls "good" can be a loss for you.

Example: you spend $5 on clicks and sell one $19.99 shirt. Your ACoS is 25%. To a seller with a 40% margin, that's a healthy campaign. To you, it's $5 of ad spend against roughly $5 of royalty: zero profit.

The table: break even ACoS at five Merch price points

The royalties below are worked examples, not Amazon's figures. Your royalty depends on the product, the marketplace and the price you set, so swap in your own number. The point is the shape of the table, not the exact cents.

Two things stand out.

First, the range is wide. In these examples the cheapest shirt has to keep ACoS under about 14%, while the most expensive can carry 27%. A campaign at 20% ACoS is profitable at $21.99 and losing money at $15.99.

Second, lower prices hurt more than they look. Dropping from $19.99 to $15.99 is a 20% price cut, but in this example it halves the royalty. The break-even line falls from 23% to 14%, and clicks don't get any cheaper because your price went down.

If a design sits at a launch or promo price, its break even ACoS is the lowest in your account. That's worth knowing before you put it in an aggressive campaign.

Why the after-returns column is the one to use

A returned shirt takes its royalty back. The click that sold it has already been paid for.

On this site we measured a 9.1% return rate across 1,645 Merch units (the 60-day returns data). Your rate will differ by niche and product type, but it won't be zero.

To include returns, multiply the royalty by the share of orders you keep:

break even ACoS after returns = royalty × (1 − return rate) ÷ list price

Worked through for the $19.99 shirt:

Royalty: $5.00.

Share of orders kept at a 9.1% return rate: 0.909.

Royalty you actually keep per order, on average: $5.00 × 0.909 = $4.55.

Break even ACoS: $4.55 ÷ $19.99 = 22.7%.

Two points of ACoS sounds small. Across a few hundred campaigns that sit near the line, it's the difference between a small profit and a small loss that you can't see in the ad console.

Turning break even ACoS into a bid

You can't set ACoS in Amazon Ads. You set bids. So the useful version of the same idea is the break-even cost per click:

break-even CPC = royalty after returns × conversion rate

Conversion rate here is orders per click. At 5%, one click in 20 buys. At 10%, one in 10.

This is where low prices really bite. A $15.99 design that converts at 5% can afford about 11 cents a click. If the keyword's going rate is 30 cents, no bid setting fixes that; only a better conversion rate or a higher price does.

It also shows why one bid for every design fails. The same 25-cent bid is a loss on a $15.99 design at 5% conversion and has room to spare on a $24.99 design at 10%.

The free Merch max bid calculator runs this sum for any price, royalty and conversion rate. For the ACoS side, the break-even ACoS calculator has a Merch mode that takes just price and royalty.

Reading a real campaign against the line

Here's how to check a campaign, using made-up numbers.

Campaign A looks expensive at $12, but it's under its line and earns $1.64 after ad spend.

Campaign B spends less and has a respectable-looking 25% ACoS. It's losing $3.45, because its royalty can't carry that ACoS.

A practical routine, every week or two:

Export the campaigns that spent money in the period.

Next to each, write its design's list price and royalty.

Work out break even ACoS after returns for that price.

Sort by ACoS minus break even. The top of the list is where money leaks.

For campaigns well over the line with enough clicks to judge, lower bids toward the break-even CPC. For campaigns well under it, there's room to raise bids or budgets.

"Enough clicks to judge" matters. At a 5% conversion rate you expect one order per 20 clicks, so a campaign with 6 clicks and no order hasn't told you much yet.

Break even ACoS is a ceiling, not a target

Running every campaign exactly at break-even means all that ad spend earns you nothing. It's the line you shouldn't cross, not the place to aim.

A simple way to set a target is to decide what share of the royalty you want to keep:

• Keep half the royalty: target ACoS = half the break-even. For the $19.99 example, about 11%.
• Keep a quarter: target ACoS = three quarters of break-even, about 17%.
• Accept break-even on purpose: some sellers run a new design at break-even for a few weeks to get first sales. That's a choice, and worth giving an end date.

If you track total ad spend against total sales, including organic ones, TACoS is the account-level view of the same question. And if your margin thinking is still built around physical products, our royalty-first PPC strategy walks through the rest of the setup.

How PPC Optimizer Pro handles this

Working out a break-even line per design by hand is fine for ten campaigns. It doesn't scale to five hundred.

In the PPC Optimizer Pro Lab you upload your 60, 30 and 14-day Amazon bulk files plus your sales report. The Lab works out break-even from each design's royalty, subtracts returns, and compares every target against it. Every proposed change comes with the reason behind it, and you download one Amazon-ready bulk file to upload yourself.

There's a 7-day free trial, and the calculators at /free-tools are free without an account.

FAQ

What is a good ACoS for Merch by Amazon?

There isn't one number. A good ACoS is one below your break even ACoS for that design's price, and that ranges from roughly 14% to 27% across the examples above. Compare each campaign to its own line, not to an account average.

How do I calculate break even ACoS for a Merch shirt?

Divide your royalty by the list price. For a $19.99 shirt paying $5, that's 25%. To account for returns, multiply the royalty by one minus your return rate first: at 9.1% returns, $4.55 ÷ $19.99 = 22.7%.

Why is my ACoS low but I'm still losing money?

Because Amazon calculates ACoS on the full list price, while you keep only the royalty. A 25% ACoS that would be fine for a product with a 40% margin can be a loss on a $15.99 Merch shirt whose break even ACoS is about 14%.

Does raising my price raise my break even ACoS?

Usually, yes, because most of each extra dollar of price becomes extra royalty in the examples above. Higher prices can lower your conversion rate, though, so check the break-even CPC as well: royalty × conversion rate is what decides your bid.

Should I include returns in break even ACoS?

Yes. A return takes the royalty back but not the ad cost. Even a single-digit return rate moves the line by a couple of percentage points, which is enough to turn campaigns sitting near break-even into losers.

Keep reading

• What ACoS really measures, and the royalty version
• What Amazon PPC costs per click, and what you can afford
• Amazon PPC for Black Friday: a Merch seller's Q4 plan