How to calculate your zero profit aCos
Whether you’re just beginning or a regular use of Amazon ppc campaigns this is probably the single more important metrics. One of the things I see a lot across all digital media is that clients that rush to get live on pay per click and figure out to measure it as they go. Maybe it’s because digital is so fast paced that there is this innate standard to move fast and break things. The problem that I find most often, is that some clients do not ever go back and really analyze what the right measurement is. The first step is to understand your amazon aCos calculation.
For Amazon, it’s one of the most straight forward calculation since there is limited attribution. So how do you get started? Well it’s quite simple. We must have a really good understanding of what your cost of good and the overhead associate with your business. I could go through the whole checklist, but to be honest, there are better and quicker calculators online. Here is one I recommend: Amazon FBA Calculator
aCos Calculation Example
But here is a very simple and basic example of how you can calculate your own aCos.
Notice that each product is going to have a different 0 profit and 0 loss aCos. This is because each product has different costs associated with it, right? If you sell products that have totally different cost to manufacture, store, and ship then your margin is naturally going to be different. With the aCos calculation you can find out what the net 0 profit is for each product. Now that you know the aCos where you will neither make nor lose money, you can aim for below that. Any aCos lower that your net 0. So now the question becomes how much profit are you comfortable with making?
Bonus tip: Take a look at your competition. Are you priced competitively? Can you afford to drop the price of your product while still making your target profit? Price is incredibly important on Amazon from the consumer perspective.
When you start your amazon advertising ppc campaign, you’ll need to evaluate how your campaigns are doing by seeing what your aCos is compared to your net 0 aCos.
Bonus tip: While you’re creating campaigns, make sure that you are including the aCos in the campaign name. This will help make it easy to reference while you’re optimizing your campaigns.
Once you are comfortable with your amazon aCos calculation, then please check out our amazon advertising ppc tool.