Name: ACOS + VAT. ACOS for Amazon KDP and POD Products. Adding Amazon Advertising VAT or Sales Tax.
Uploaded: 2022-10-17T12:42:40+00:00
Duration: 7 min 5 s
Description: No Affiliate Links, No Courses! Just my honest and personal opinion on all things self-publishing 🤙 Link to previous video: Easy ACOS: https://stephenpeel.uk/easyacos ACOS is a tricky one to understan

3 years ago

KDP Amazon Stephen Peel Paul Marles amazon kdp acos what is acos how to use acos does acos matter amazon acos kdp acos

No Affiliate Links, No Courses! Just my honest and personal opinion on all things self-publishing 🤙

Link to previous video: Easy ACOS: https://stephenpeel.uk/easyacos

ACOS is a tricky one to understand for many, so I have created this video with the hope I can explain it adequately. There is also an Excel Spreadsheet used in the video, which I have uploaded to the Facebook Group (in the links below). You can download it from there and us that calculator to assist you.

🧮 How to work out your ACOS Break Even without the Excel Calculator:

ACOS is simply a percentage of the retail price of the product.

Calculation example in formulas: Product Royalty (example: 1.50), divided by the Retail Price (example: 5.99) x 100% = ACOS 25.04%. So that's: 1.50/5.99x100%

Formula: =sum((1.50/5.99)*100%) If adding this to a spreadsheet, you need to apply the cell references. For example =sum((H12/G12)*100%) If you wish to add a little buffer as I have done: =sum((H12/G12)*100%)-2%

🧮 How to work out your ACOS with Ad Spend

When viewing your advertisement costs and ACOS, you will see the ACOS in percentage. This is one of the books I started advertising this week. It's only a simple and cheap book, but it clearly shows how things work.

Based on 4 of the same book sold in one advertisement: Product Royalty 1.29, divided by the Retail Price of 5.99, x 100% = ACOS 21.54%.

In that above calculation, I have determined my maximum ACOS spend percentage for each book, anything over 21.54%, and I am at a loss; anything under and I am in profit.

I have sold 4 books for 19.96 in a single advertisement. I need to work out what my ACOS is now based on what I have spent on advertising.

In my Amazon Advertising Campaign, I see that my Spend is 1.45, Orders 4, Sales 19.96, ACOS 7.26%. But how did Amazon come to arrive at 7.26%? Well, it took the Ad Spend of 1.45 and divided it by the Sales of 19.96, giving the figure of 7.26. Then they simply ad the percentage symbol %. Of course, that's how I do it, no doubt Amazon's formulas are slightly different, but the result is the same.

🧮 Overall Advertising ACOS example:

In one current campaign, my retail sales are 71.86. My ACOS is 17.10%. The highest I can go without having to lose money, other than the royalties on the retail sales, is 26.05% ACOS. This last ACOS figure of 26.05% was calculated between all the books in that particular campaign. Anything below that ACOS is satisfactory; anything above it, and I will run at a loss. So, as my ACOS is just 17.10%, I am in profit. The lower that ACOS is, the more profit I make.

🧮 VAT Calculation to Advertising Costs

Percentage of VAT calculating:

=sum((ad spend)*(20%))+ad spend
The formula in the calculator is: =sum(j10*n10)+j10
Put simply: 1x20%+1= 1.2

Revised ACOS to include the VAT rise:

The cost of advertising including VAT, divided by the Retail Price, times 100
The formula in the Calculator is: =sum(o10/e10)*100
Put simply: 1.20 divided by 10.00, x 100

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