Determining Our Target-ACOS

Learn how to calculate and set your target ACoS, and then adjust it according to your store's needs from RevenueWize.

The Target ACOS should be selected depending on the product life cycle phase. Each product can be in one of the following stages:

  • Launch
  • Discovery
  • Profitability

Launch Stage

When you launch a new product on Amazon, the goal is to get as many sales as possible to generate as many reviews as possible.

For this, you need to set a High Target ACOS – much above the break-even ACOS.

It is not uncommon to set a Target ACOS of 100% or even higher at this stage.

Discovery Stage

At this stage, the product is launched, and it received some ranking and reviews. The goal now, is to figure out which keywords are relevant for your product, and what buyers search for when they are looking for a product like yours.

At this stage, the Target ACOS should be around the break-even ACOS or even a bit higher.

It is vital to notice that it is a mistake to set a target ACOS, which is very different than the current ACOS.

If, for example, the current ACOS is 60% and the break-even ACOS is 17%, the Target ACOS should be around 50%, and only once the current ACOS drops to 50%, it should be lowered again to 40 and then 30, and so on.

Notice that at this stage, you are spending advertising dollars for the discovery of which keywords are relevant to your product, and some of these tests mean that you will spend money on non-relevant keywords, which only cause waste.

Shutting down nonrelevant keywords will bring the ACOS down.

Profitability Stage

At this stage, the product should be profitable. The Target ACOS should be below the break-even ACOS.

At this stage, the relevant keywords should have already been discovered, and the exact keywords are managed by bid results.

Like before, it is important not to make drastic changes to the target ACOS and it can’t be set too far from the current ACOS.