If you’re selling on Amazon, you should understand how to calculate your ACoS, or Amazon cost-per-sale. However, the problem with Amazon Seller Central’s calculation is that it does not include a special tool to calculate ACoS. Furthermore, ACoS is influenced by PPC campaigns, so you should calculate organic and PPC sales separately.
TACoS
The Amazon TACoS is a measure of the amount of revenue generated by a product or brand. A good TACoS is 6 to 10 percent, and should reflect a brand’s performance and marketing objectives. The TACoS is usually higher for new products, while it’s lower for products already in the market. TACoS is useful for optimizing your marketing strategies and identifying blind spots.
The TACoS metric can help Amazon sellers better understand their overall ad budget. It provides a clear picture of how much money is being spent on advertising a product. A low TACoS means that the product is generating a strong revenue stream and that advertising costs are low.
Targeted ad cost versus sales
When selling on Amazon, you must spend money to make money. Therefore, you should target different ACoS for different products to increase visibility and profits. For instance, if you sell a book on writing, you would target a higher ACOS than you would for an eBook on the same topic. In other words, the higher the ACOS, the more profit you will make.
You can calculate your ACoS at different levels, such as the campaign, ad group, keyword, or ASIN. In most cases, the higher the ACoS, the more you will earn per sale.
Calculation
The ACoS (average cost of sales) on Amazon is a percentage based on the average order size and sales volume. The average ACoS for most categories and product types is between 30% and 35%. This means that the average seller is earning more from each sale than they spend on advertising. If you want to make money on Amazon, this percentage is a great benchmark to aim for.
Once you calculate your ACoS, you can decide what level to set for your ad campaign. You should try to keep the ACoS lower than your profit margin.
Benchmarking
ACoS (average cost per sale) is one of the key metrics to measure performance on Amazon. These metrics help sellers to calculate how effective their campaigns are by comparing their performance against those of other sellers. The ACoS formula factors in the number of clicks, orders and average selling price. This metric can also include the conversion rate and the click-through rate. Using the ACoS Benchmarker tool, sellers can track their performance on Amazon and identify growth opportunities and savings opportunities.
To achieve a good ACoS, the ACoS percentage must be lower than the profit margin of the product before advertising. A larger gap means a higher profit margin. While most sellers consider profit margins to be the most important factor, they often overlook the impact of advertising costs on the overall ACoS of a product. By analyzing the ACoS ratio, a seller can change the break-even point and determine how much money they should spend on advertising in order to achieve the highest ACoS.
Did you miss our previous article…
https://zonspeed.com/viral-launch-how-to-make-your-viral-launch-a-success
