ACOS + VAT. ACOS for Amazon KDP and POD Products. Adding Amazon Advertising VAT or Sales Tax.

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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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