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Understanding Amazon TACoS vs. ACoS, How to Lower It, and Formula
Understanding Amazon TACoS vs. ACoS, How to Lower It, and Formula
8min read·Jim Volgano·Feb 24, 2026
When you’re running Amazon PPC (Pay-Per-Click), one of the most important things to understand is the difference between ACoS and TACoS. Both matter, but they tell you very different things about how your business is performing on Amazon, especially when you’re launching new products and building a brand.
If you only look at ACoS like many sellers and agencies do and ignore TACoS, you can easily work against yourself. This guide defines both Amazon TACoS and ACoS, compares the two in detail, and explains why and how you can lower your TACoS. And we’ll even show you how to calculate TACoS. Stay tuned!
Table of Contents
- What is Amazon ACoS?
- What is Amazon TACoS?
- Why ACoS and TACoS both matter
- How TACoS reflects organic growth
- Why chasing a low Amazon ACoS can hurt growth
- TACoS formula: How to calculate Amazon TACoS
- Why ACoS and TACoS do not need to move together
- How to lower TACoS (Reducing ad spend while growing sales on Amazon)
- Conclusion
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Understanding Amazon TACoS vs. ACoS, How to Lower It, and Formula
What is Amazon ACoS?
ACoS stands for Advertising Cost of Sales. It’s calculated by taking your PPC spend and dividing it by your PPC sales, which gives you a percentage. ACoS tells you how profitable your advertising-driven sales are.
Generally, what you want to aim for is break-even or better. If your product has a 30% profit margin, then you want your ACoS to be 30% or lower. That way, you know that the sales coming directly from your ads are profitable.
However, while ACoS is useful, it only shows part of the picture, and this is the main reason why you need to focus on TACoS.
What is Amazon TACoS?
TACoS stands for Total Advertising Cost of Sales. You calculate it by dividing your PPC spend by your total sales, which includes both PPC sales and organic sales.
This is what makes TACoS so important. Unlike ACoS, TACoS shows you how your advertising spend impacts your entire business, not just your ad campaigns.
Why ACoS and TACoS both matter
When you’re launching a new product, most of your sales are going to come from PPC. The goal at that stage is not just to make profit from ads; it’s to put yourself in highly sponsored positions for relevant keywords.
You might be ranked hundreds of positions down organically, but by sponsoring those keywords, you can appear right at the top. If you’ve done a good job with your product, pricing, images, and copy, those ads start converting into sales.
When that happens, Amazon begins to improve your keyword rankings. That leads to the real goal of selling on Amazon: organic visibility.
PPC is not just about making money directly from ads. It’s a tool to drive ranking, visibility, and long-term profitability.
How TACoS reflects organic growth
Early on, your ACoS and TACoS will often be very close to each other. That’s because most of your sales are coming from PPC.
Over time, if your PPC is working properly, you want to see a clear gap develop between the two. Your ACoS might stay relatively high, but your TACoS should start coming down. That difference tells you that your advertising is driving organic sales.
As organic sales increase, your total advertising cost as a percentage of revenue decreases and that’s when your business becomes more profitable.
Why chasing a low Amazon ACoS can hurt growth
One of the biggest mistakes sellers make is focusing too much on lowering ACoS. You might reduce bids, cut spend, and get a very low ACoS but what you also get is fewer impressions and less visibility.
That slows down keyword ranking and organic growth.
You don’t want to turn PPC off, and you don’t want to starve your campaigns just to make ACoS look good. It’s often better to allow ACoS to increase slightly if it helps drive more sales, more ranking, and a lower TACoS overall.
What you should actually be aiming for
Your long-term goal is not the lowest possible ACoS. Your real goal is a low TACoS, ideally around 10% as your brand matures.
That’s because TACoS is the metric that reflects how much money you’re actually keeping. It shows how efficient your advertising is at driving organic growth and total revenue.
If your ACoS is going down but your TACoS is going up, you’re moving in the wrong direction. In that case, spending more on PPC to gain ranking and visibility can actually make you more profitable over time.
TACoS formula: How to calculate Amazon TACoS
You’re looking at how your advertising supports your total business performance on Amazon, not just ad-driven sales, when determining your TACoS.
So to calculate it, you need two numbers: your total advertising spend and your total sales, which includes both PPC and organic sales. Start by going into your advertising console to find how much you spent on ads for a given period. Then take that total ad spend and divide it by your total sales for the same timeframe.
TACoS = Total Advertising Spend ÷ Total Sales × 100
That percentage is your TACOS. A TACoS between 10% and 20% is generally considered healthy. Even if your ACoS is high, a low TACoS often means your ads are successfully driving organic sales.
Why ACoS and TACoS do not need to move together
When optimizing for TACoS, it’s completely possible and normal for ACoS to increase while TACoS decreases. This happens because you’re investing more aggressively in competitive, high-visibility keyword segments that drive organic growth.
ACoS and TACoS do not need to trend in tandem for your strategy to be successful. This is the key difference between optimizing for ACoS versus optimizing for TACoS.
How to lower TACoS (Reducing ad spend while growing sales on Amazon)
Lowering TACoS can be distilled into three core principles, and each step works together to improve efficiency without harming topline revenue.
1. Set a daily budget cap
The first step is setting a daily budget cap at the account level. This allows you to control how much your ad account spends on a daily basis without overspending.
There is a certain level of ad spend that can actually increase TACoS even if other metrics, such as total sales and ACoS, are moving in a positive direction. This happens because TACoS is a trailing indicator. Organic ranking takes time to catch up to increases in total sales.
To determine a good daily budget cap, start by calculating your baseline TACoS over the last 30 days. For example, if your total sales are 100,000 and your ad spend is 20,000, your TACoS is 20%.
If your short-term target is to lower TACoS to 19%, then your theoretical ad spend should be 19% of total sales, or 19,000. Spread across 30 days, this puts your daily budget cap at approximately 630. This is the amount your account should not exceed on a daily basis.
An added benefit of capping spend at the account level is that Amazon’s ad system becomes more efficient at distributing budget toward better-performing campaigns, rather than allowing inefficient campaigns to overspend on their own.
2. Lower or cut ad spend to campaigns with less organic sales uplift
Not all PPC sales are created equal. Some targeting types do not generate meaningful organic uplift, and these should be the first to have budgets reduced or cut entirely when optimizing for TACoS.
The first campaigns on the chopping block are usually branded campaigns, unless competitors are aggressively bidding on your brand terms and taking market share.
Next are product targeting campaigns. These campaigns do not show up frequently in keyword search results, which means they typically provide less organic ranking uplift compared to keyword-targeting campaigns. This includes product targeting across Sponsored Products, Sponsored Brands, and Sponsored Display.
You can also reduce or cut product defense campaigns, which target your own catalog, as well as auto campaigns, since their budgets are spread across multiple targeting types and often result in lower organic uplift.
Finally, it’s worth reducing spend on campaigns tied to products that are not generating strong profit. Proper budget management requires a solid campaign structure, clearly separating branded vs. non-branded and auto vs. manual campaigns.
3. Increase ad spend to campaigns with stronger organic sales uplift
The final step is increasing ad spend on campaigns that drive strong organic sales uplift. These are primarily non-branded keyword targeting campaigns under Sponsored Products and Sponsored Brands.
These campaigns allow your products to appear directly in shopper keyword search results, which leads to improved keyword ranking and organic visibility.
By identifying non-branded keyword campaigns that are frequently running out of budget and increasing spend on them, you can drive more sales volume, improve ranking, and ultimately lower TACoS over time.
Conclusion
Don’t look at ACoS in isolation. ACoS tells you how your ads are performing, but TACoS tells you how your business is performing. If your TACoS is coming down while your organic sales are growing, your PPC strategy is doing exactly what it’s supposed to do. It’s building visibility, improving ranking, and increasing long-term profitability.
Remember that over-optimizing for TACoS without considering total sales can hurt growth. The goal is not just a lower percentage, it’s a healthier, more profitable business that continues to scale sustainably.
Understanding ACoS and TACoS, and having a strategy to lower them, is only a fraction of what should be done to build a profitable and scalable business on Amazon. To truly grow, you need deeper insights, not just into advertising performance, but into product sourcing, market demand, promotion strategies, and supplier quality. Accio.com, an AI-powered tool designed specifically for B2B sellers who need faster, clearer insights across the entire sourcing and selling process, can help you do exactly that.
The platform helps you analyze product opportunities, compare suppliers, and assess reliability and competitiveness. This makes it easier to choose products that not only convert well through PPC but also have strong margins and long-term potential. One of the biggest strengths of Accio is how simple it is to use. All you need to do is upload an image or enter your question to get instant relevant insights.