PPC Strategy With Increasing Amazon Fees: How to Protect Your Margins in 2026

If your PPC campaigns felt more expensive last month, you’re not imagining it. January 15th, 2026 changed the math on every single campaign you’re running—and most Amazon sellers won’t notice until they’ve burned through another 30 days of budget on campaigns that look profitable but are actually bleeding cash.

We manage PPC for 50+ brands doing seven and eight figures monthly. In the past three weeks, we’ve had to recalculate break-even ACoS for every single account because the old numbers don’t work anymore.

Here’s exactly what changed, why your current ACoS targets are probably wrong, and how to fix it without tanking your sales volume.

What Actually Changed on January 15th

Here’s what most sellers think happened: “Amazon raised fees again, everything’s more expensive, that’s just how it is.”

But here’s what actually happened.

On January 15th, 2026, Amazon increased FBA fulfillment fees by an average of eight cents per unit. Doesn’t sound like much, right?

The Hidden Impact of “Just Eight Cents”

Eight cents per unit equals anywhere from half a percent to two percent of your margin, depending on your product price. That means your break-even ACoS just dropped by the same amount—and you probably didn’t notice.

But here’s the critical detail most sellers miss: that $0.08 is just an average. The actual per-unit increases vary dramatically by product size and price tier:

Small Standard products (≤18×14×8″, ≤20 lbs):

• Below $10: +$0.12
• $10–$50: +$0.25
• Above $50: +$0.51

Large Standard products (exceeds small standard dimensions):

• Below $10: No change
• $10–$50: +$0.05
• Above $50: +$0.31

So if you’re selling a small standard item priced between $10 and $50—one of the most common product profiles on Amazon—you’re not paying an extra eight cents. You’re paying an extra quarter per unit.

Why This Fee Increase Is Different

Here’s why this hits harder than past increases. Amazon didn’t raise base FBA fulfillment fees in 2025—they explicitly stated they would “not increase US referral and FBA fees” and would “not introduce any new fee types.”

But they did make other changes that ate into margins:

Aged inventory surcharges expanded to include inventory stored 241–270 days (previously only 271+ days). If you’re holding seasonal inventory or slower-moving SKUs, you started paying penalties earlier in the storage cycle.

Dimensional weight calculations became the standard for large items in 2024, using the greater of unit weight or dimensional weight. Amazon uses a divisor of 139 for US FBA, which means lightweight but bulky products suddenly faced higher fees without any actual weight increase.

Peak fulfillment fees ran from October 15, 2025 through January 14, 2026—adding approximately $0.30 per unit for standard-size and $1.50 per unit for large/bulky items during the critical Q4 period.

Then January 15th hits with the first actual fulfillment fee increase in two years—stacked on top of all those 2025 changes you might’ve already absorbed.

The Math Everyone’s Missing

That eight-cent increase doesn’t sound scary until you do the math.

On a $30 product selling 1,000 units a month, that’s $80 in extra fees if you’re in the large standard tier (where the increase is actually $0.05). But if you’re in the small standard tier at that price point, you’re facing a $0.25 increase—that’s $250 per month in margin erosion.

Multiply that across your catalog, and you’re looking at hundreds or thousands in margin erosion you can’t see in your profit dashboard.

The Compounding Fee Problem

This isn’t just FBA fees. Multiple fee structures changed simultaneously:

Inbound placement fees got more granular with additional size tiers. The average increase is $0.05 per unit across the board, but items over 5 pounds saw an average increase of $0.72 per unit. The upper limit for Large Standard increased by an average of $0.40 per unit.

Important exception: Amazon-optimized shipments meeting the “five box rule” (at least 5 identical cartons per item) continue to have no inbound fees.

Low-inventory surcharges now calculate at the FNSKU level instead of parent ASIN. This means if you stock out on one color variation, you’re paying penalties even if your other colors are in stock. The fee applies when your specific inventory (by variation) falls below 28 days of supply, with rates ranging from $0.32 to $2.09 per unit depending on size, weight, and how far below the threshold you fall.

FBA Prep and Labeling services ended on January 1, 2026. Shipments created after January 1 that don’t arrive prepped or labeled won’t be reimbursed if lost or damaged. If you were relying on Amazon to prep your inventory, you now need to handle it yourself or pay a 3PL.

The Bottom Line

If you haven’t recalculated your break-even ACoS since January 14th, your targets are wrong.

A campaign running at 28% ACoS that was profitable three weeks ago might be losing you money on every sale today—and Seller Central will still show it as green.

The CPC Problem You’re Not Tracking

Most sellers watch ACoS like a hawk. You see it creep from 27% to 31% and you panic.

But here’s what you’re probably not tracking: cost per click has been rising faster than ACoS in most categories.

Current CPC Benchmarks

Average CPC for Sponsored Products is now $0.91 to $1.21 depending on category. Multiple data sources confirm this range:

• Sequence Commerce: $1.12 average (up from $0.97 in 2024)
• Atom11: $0.80–$1.20 for Sponsored Products
• SellerMetrics: $0.81–$1.30 (varies by keyword competition)
• Ad Badger: $1.12 average for 2025

In competitive spaces, it’s much worse:

Supplements & Vitamins: $2.00–$3.50 average, with peak keywords reaching $6.00+

Consumer Electronics: $1.50–$2.50 average, peaks at $5.00+

Health & Personal Care: $1.45–$1.80 average, peaks at $4.00+

Beauty & Skincare: $1.30–$1.70 average, peaks at $3.00+

Automotive: $1.40–$1.90 average, peaks at $3.50+

The CPC Inflation Trend

CPCs have gone up 10 to 20% in the past year alone. Here’s the historical trajectory:

After two years of relatively stable CPCs in 2023-2024, we saw a sharp 15.5% jump in 2025—and projections show another 8-12% increase through 2026.

Why This Matters More Than ACoS

Here’s why rising CPC matters more than ACoS fluctuations: when CPC goes up but your conversion rate stays the same, you’re paying more per sale—which means even if your ACoS looks stable, your actual profit per conversion is shrinking.

Let’s work through the math:

Last year:

• CPC: $0.80
• Conversion rate: 10%
• Cost per sale: $0.80 × 10 clicks = $8.00

This year:

• CPC: $0.96
• Conversion rate: 10% (unchanged)
• Cost per sale: $0.96 × 10 clicks = $9.60

Your ACoS might look identical if your product price didn’t change, but you just lost $1.60 in profit per conversion.

Stack that on top of the eight-cent FBA fee increase (or up to $0.51 for some products), and you’re looking at a double squeeze:

• Higher fees eating margin from the bottom
• Higher CPCs eating margin from the top

The campaigns that worked perfectly six months ago are now underwater—and the only signal you get is when you check your monthly P&L and wonder why profit dropped.

Why CPCs Keep Rising

This isn’t a temporary spike. The structural factors driving CPC inflation are intensifying:

Over 70% of Amazon sellers now run PPC campaigns, up from roughly 40% just five years ago. More advertisers bidding on the same keywords naturally drives prices up.

Organic visibility is declining as Amazon adds more ad placements to search results. Sellers who previously relied on organic rank now need to advertise just to maintain visibility.

Average competitors per keyword has increased to 15–25, up from 10–18 two years ago. High-value keywords can have 50+ advertisers competing simultaneously.

Amazon’s ad revenue hit $68 billion in 2025 (up 22% year-over-year in Q4). The platform’s advertising business generated $21.3 billion in Q4 2025 alone. When advertising becomes this profitable, Amazon has every incentive to prioritize paid placements over organic results.

The Strategic Shift We Made in Q4 2025

This is why we stopped optimizing purely for ACoS in Q4 2025.

We started tracking CPC trends by campaign, by ad group, sometimes even by keyword. If CPC is rising faster than our conversion rate can compensate, we adjust bids down before ACoS even moves—because by the time ACoS reflects the problem, we’ve already wasted budget.

The average Amazon PPC conversion rate hovers around 9.5–11.1%, with the median at roughly 10%. But conversion rates vary significantly by price point:

• Under $25: 12.5%
• $25–50: 10.2%
• $50–100: 8.7%
• $100+: 6.4%

If your CPC increases by 20% but your conversion rate only improves by 5%, you’re losing margin on every sale. Most sellers don’t catch this until it’s too late.

How to Calculate Your New Break-Even ACoS

You probably learned break-even ACoS as a simple formula: profit margin equals break-even ACoS. That worked fine when fees were stable.

But now you need to factor in fee increases as a margin hit, not just a static number in your calculation.

The Standard Break-Even Formula

The industry-standard formula for break-even ACoS is:

Break-even ACoS = Pre-Ad Profit Margin (%)

Which breaks down to:

((Selling Price – COGS – Amazon Fees) / Selling Price) × 100

Whatever your pre-advertising profit margin is for a given product is the maximum amount you can spend on advertising and still turn a profit. Or, put another way, it’s your break-even ACoS.

How Fee Increases Change the Math

Your old break-even formula assumed stable costs. Your new formula needs to account for the fact that an eight-cent fee increase (or more, depending on your product tier) effectively drops your margin by 0.3 to 1.5 percent depending on your average selling price.

Here’s the exact math with a worked example:

Scenario: $30 product

Before the fee increase:

• Selling price: $30
• Margin after Amazon’s cut: 30% = $9 profit per sale
• Break-even ACoS: 30% (you could spend up to $9 on ads)

After the fee increase:

• Add the $0.08 fee increase (using the average)
• New margin: $9.00 – $0.08 = $8.92
• New break-even ACoS: $8.92 / $30 = 29.7%

Doesn’t sound like much, right?

But if you’re running at 30% ACoS thinking you’re break-even, you’re actually losing eight cents per sale. Sell 1,000 units a month and you just burned $80 in profit without realizing it.

The Impact on Lower-Priced Products

For lower-priced products, the impact is proportionally worse.

Scenario: $15 product

Using the $0.08 average fee increase:

• Fee increase as percentage of price: $0.08 / $15 = 0.53%
• If your margin was 25%, it’s now 24.47%

If you’re running at 25% ACoS thinking you’re safe, you’re losing $0.08 per sale, or $13 per 100 sales.

But remember—if this $15 product falls in the small standard tier between $10–$50, the actual fee increase isn’t $0.08. It’s $0.25.

• Fee increase: $0.25 / $15 = 1.67% of price
• If your margin was 25%, it’s now 23.33%
• Running at 25% ACoS means you’re losing $0.25 per sale, or $250 per 1,000 units

What We Did for Every Account in January

Here’s our exact process:

1. Pulled Average Selling Price by product from the past 60 days
2. Identified the correct fee tier for each product (small standard vs. large standard, price range)
3. Calculated the actual fee impact (not the $0.08 average, but the specific increase for that tier)
4. Recalculated break-even ACoS for every campaign using the new margin numbers

In most cases, the new target was 1.5 to 3 points lower than the old one.

That means if you were comfortable running at 32% ACoS before, your new safe zone is probably 29 to 30.5%. And if you don’t adjust, those extra two points go straight to Amazon in wasted spend.

Average ACoS Benchmarks by Category

For context, here are the current ACoS benchmarks across categories (based on Amazon Brand Metrics data):

The 2025 overall average ACoS is approximately 30.2%. Top performers maintain 22–25%. A general target range of 25–35% is considered typical.

If your recalculated break-even is below your category’s typical ACoS, you need to make adjustments immediately—or accept that you’re trading margin for market share.

Three Adjustments That Protect Profit Without Killing Volume

When costs go up, the instinct is to cut budgets across the board. Kill underperformers, lower bids, pause anything above break-even.

But that’s how you tank your organic rank and lose the compounding traffic you’ve built.

The smarter move is surgical: protect profit on what’s bleeding, double down on what’s working.

Adjustment #1: Lower Bids on Mid-Performers First

The Strategy: Lower bids by 10 to 20% on campaigns running between break-even and 5 points above.

These are the ones that feel “okay” but aren’t killing it. They’re the first place margin leaks when costs rise. Drop bids just enough to bring ACoS down 2 to 3 points without destroying impression share.

Real Example:

We managed a brand spending $15,000 a month across 12 campaigns. Six of them were running at 32–36% ACoS with a break-even of 30%.

We dropped bids on those six campaigns by 15%.

Results after 10 days:

• ACoS improved from 34% average to 30.5%
• Sales volume dropped only 8%
• Monthly savings: $525 in wasted spend
• Organic rank held steady (no significant change)

The key is to move incrementally. Don’t cut bids by 30-40% overnight. Start with 10-15%, let it run for 10-14 days, measure the impact, then adjust again if needed.

Why mid-performers first?

Your top performers (campaigns running at or below break-even ACoS with strong ROAS) should be left alone or even scaled up. Your worst performers (campaigns 10+ points above break-even) should probably be paused or rebuilt entirely.

Mid-performers are where you have the most leverage—they’re close to profitable, and small bid reductions can push them over the line without killing volume.

Adjustment #2: Shift Budget from Broad Discovery to Exact-Match Proven Winners

The Strategy: Take 20 to 30% of your experimental budget and reallocate it to campaigns with proven ROAS above your new break-even.

When margins tighten, you can’t afford to burn budget finding new keywords. You’ll sacrifice some discovery, but you’ll protect cash flow.

The Data Supporting This:

Conversion rates vary dramatically by keyword specificity:

Longer-tail, exact-match keywords convert nearly 2x better at roughly half the CPC compared to short, broad keywords.

Additional Performance Data:

Branded keywords (containing your brand name):

• Conversion rate: 15–25%
• CPC: 30–50% lower than generic terms

Non-branded generic terms:

• Conversion rate: 8–12%

Competitor keywords:

• Conversion rate: 5–9%
• CPC: Higher than generic terms

During tight margin periods, shift spend toward:

• Exact-match branded keywords
• Proven long-tail exact-match keywords with 10%+ CVR
• Product targeting campaigns with demonstrated ROAS

Reduce spend on:

• Broad-match discovery campaigns
• Short, high-CPC generic keywords
• Competitor keyword campaigns (unless they’re converting exceptionally well)

You’re not abandoning discovery forever—you’re temporarily prioritizing efficiency until margins stabilize.

Adjustment #3: Switch to Dynamic Bidding “Down Only”

The Strategy: Switch underperforming campaigns to dynamic bidding with “down only” rules. This tells Amazon to lower your bid in real-time when conversion probability drops, but never raise it.

You keep impression share on high-intent clicks and auto-protect against low-quality traffic that would’ve driven ACoS up.

How It Works:

With the “down only” strategy, Amazon lowers your bids by up to 100% in real-time when it determines conversion probability is low. Your bid never exceeds your set maximum.

This is different from “up and down” bidding, where Amazon can increase your bid by up to 100% for top-of-search placements and lower it for low-probability clicks.

The Research:

A study by BidX analyzing November 2021 campaign data found that “down only” bidding delivered:

• Better click-through rate than “up and down” or “fixed bids”
• Lower cost per click
• Lower ACoS
• Slightly lower conversion rate (~1 percentage point less than fixed bids)

BidX’s conclusion: “We therefore generally recommend the ‘down only’ strategy if the focus of your advertising is on profitability.”

Real Example:

We managed an account with three campaigns stuck at 35 to 38% ACoS. Their break-even was 32%, so they were bleeding margin.

We switched all three to down-only bidding without changing anything else.

Results after two weeks:

• ACoS dropped to 31% average
• Daily sales: Almost identical (less than 3% variance)
• What happened: Amazon was automatically bidding them down on placements that weren’t converting—bottom-of-search, off-brand keywords, low-intent traffic

They never would’ve caught this manually because the placements looked fine at the surface level. Amazon’s algorithm identified the low-conversion clicks in real-time and protected their budget.

The Step-by-Step Implementation Plan

You don’t need to overhaul your entire account overnight. Here’s the systematic approach:

Week 1:

1. Pick your three highest-spend campaigns
2. Recalculate break-even ACoS with the new fee structure
3. If they’re running above your new break-even, lower bids by 10%
4. Let it run for 10-14 days

Week 2-3: 5. Check ACoS after 10-14 days 6. If ACoS dropped without killing volume (less than 10% sales decline), you’ve found the right adjustment 7. If volume dropped more than 15%, raise bids by 5% and retest 8. Repeat the process on the next three campaigns

Week 4: 9. Review budget allocation across all campaigns 10. Identify campaigns with ROAS below your target 11. Reduce budgets by 20-30% on low-ROAS campaigns 12. Reallocate that budget to campaigns performing above target

Ongoing: 13. Monitor CPC trends weekly 14. If CPC is rising faster than CVR, adjust bids down preemptively 15. Test “down only” bidding on 2-3 campaigns per month

Most sellers can recover 1 to 3 points of ACoS across their account in 30 days just by making small, targeted adjustments—no dramatic cuts, no panic moves.

Why Seller Central Data Is Incomplete (And What to Do About It)

Here’s what it comes down to:

Amazon built Seller Central to show you ACoS, ROAS, and attributed sales. But it doesn’t show you the margin squeeze happening underneath.

When FBA fees go up and CPCs rise 15% in the same quarter, your “profitable” campaigns stop being profitable—and the dashboard won’t tell you until it’s too late.

The Attribution Gap

But there’s an even bigger problem most sellers don’t realize.

When you recalculate break-even and adjust bids to protect margin, you’re still working with incomplete data.

Seller Central shows you ACoS and ROAS—but it can’t show you which campaigns are actually introducing customers versus which ones are just harvesting the demand you already created.

So you might cut budgets from the exact campaigns that are feeding your bottom-of-funnel conversions—and you won’t know until sales drop three weeks later.

How Amazon Marketing Cloud (AMC) Solves This

Traditional reporting relies on last-click attribution, which gives too much credit to retargeting campaigns while undervaluing brand-building or awareness efforts.

Amazon Marketing Cloud closes that gap by showing the full path to purchase.

AMC provides:

Cross-channel attribution modeling – See how Sponsored Display awareness campaigns contribute to later Sponsored Products conversions

Customer journey analysis – Track the sequence of touchpoints from first impression to purchase

Audience overlap measurement – Identify which campaigns are reaching the same customers

Custom audience creation – Build audiences using first-party data

Incrementality testing – Determine which campaigns genuinely add value versus capturing existing demand

Brands combining DSP with Sponsored Ads see:

• 1.4x higher incremental reach
• 45% higher detail page view rates
• 26% better purchase rates versus Sponsored Ads alone

The Hidden Danger of Cutting “Failing” Campaigns

Without AMC data, a campaign might look like a failure:

• ACoS: 45%
• ROAS: 2.2x
• Appears to be losing money at a 32% break-even

But AMC might reveal that this campaign:

• Introduces 60% new-to-brand customers
• Generates 3.2x the branded search volume within 14 days
• Contributes to 40% of your exact-match branded keyword conversions

Cut that campaign, and your “profitable” branded campaigns dry up three weeks later. Seller Central would never show you this connection.

The 2026 Amazon Advertising Reality

The Amazon advertising landscape has fundamentally shifted. With over 9.7 million sellers worldwide but active sellers declining from 2.4 million in 2021 to just 1.65 million by the end of 2025, the platform is consolidating.

New seller registrations hit a decade low: 165,000 in 2025, down 44% from 2024.

Revenue is concentrating among larger sellers: 100,000+ sellers now generate $1M+ annually, up from 60,000 in 2021.

The sellers who survive and thrive are the ones who:

• Understand their true unit economics
• Track CPC trends, not just ACoS
• Make surgical bid adjustments instead of panic cuts
• Use full-funnel attribution to protect profitable campaigns that look like failures

Amazon’s advertising business generated $68 billion in 2025. Every percentage point of ACoS represents hundreds or thousands of dollars flowing from your profit margin to Amazon’s ad revenue.

The fee increase on January 15th wasn’t just another cost of doing business. It was a margin compression event that changed the profitability threshold for every campaign you’re running.

If you haven’t recalculated your break-even ACoS and adjusted your bids accordingly, you’re running campaigns that look green in Seller Central but are red on your P&L.

The fix is actually simpler than you think—but it requires you to stop trusting the one metric Seller Central tells you to optimize for.

ACoS is a lagging indicator. By the time it reflects the problem, you’ve already wasted budget.

Start tracking CPC trends. Recalculate your break-even with the new fee structure. Make small, surgical bid adjustments to your mid-performers first. Shift budget from discovery to proven winners. Use dynamic bidding to auto-protect against waste.

And if you want to see the full picture—which campaigns are actually building your brand versus which ones are just capturing existing demand—you need attribution data Seller Central can’t provide.

Most sellers will keep running the same targets they used in 2025. Their margins will bleed, and they won’t understand why until it’s too late.

Don’t be most sellers.