How to Determine Your ACoS Profit Zone and Profit Margins
(Why It’s Important for Every Amazon Seller)
In order to determine if your product is profitable using PPC Entourage or using PPC in general, you need to determine what your profit margins are.
Without determining what your ACoS Profit Zone is and your profit margins, you are in danger of wasting a lot of money on needless Ad Spend.
The first step is to determine your profit margin by breaking down everything that goes into your costs:
- How much does a unit of your product cost? A simple way to calculate this is to divide the sum paid for X-amount of units by the number of units purchased. For example, if you paid $1,000 dollars for a thousand units, each unit costs $1.00.
- Next look at your shipping costs. If it costs $500 to ship one thousand units, shipping costs are $.50 per unit. This figure should represent ALL shipping costs, like customs and shipping the units to Amazon.
- Also, enter any additional per unit costs such as labeling or special packaging.
- Determine your FBA costs.
- Next, enter your average selling price and click ‘SAVE’
Your profit margin will then be revealed to you.
Ok, now let’s say you got a profit margin of 31.91 – if your ACoS is 32.00 or below, you’re making money.
If it’s 0.1% to 32%, it means you are either profitable or at least breaking even.
32% is your breakeven point – anything above it means you are losing money.
The only caveat is that if you are at 0% you have not made any sells and therefore are not profitable.
Start to utilize this knowledge in your campaigns to determine:
- what aspects of PPC are doing well for you
- what aspects need to be shut down or paused
- or whether you need to move in an entirely different direction
This PPC Entourage tool will allow you to gage the success and progress of all of your PPC campaigns. It’s easy to use and within minutes you can calculate your overall profitability for any SKU.