Each Amazon seller knows that understanding where your prices are means obtaining maximum gain. The advertising promotes earnings, however, the price of it must never be too large, occasionally, it is going to burn all your earnings. To put it differently, you need to learn how your Amazon PPC ad performs. This information you may get when you understand your merchandise ACoS.

But what exactly does ACoS mean? Amazon ACoS (Advertising Cost of sales) is an essential metric revealing how many pennies per dollar of earnings Amazon seller advertisements earn. It's figured in percent so the seller could gauge the efficacy of the Amazon PPC campaign. 

What is a Good Amazon ACoS?

Advertising Cost of Sales or ACoS essentially measures how much a vendor spends on ads to be able to earn sales from them. It's an important metric that guides you through constructing the right advertising plan. ACoS is a percent that decides just how much you need to bid on specific search phrases. You can compute ACoS by dividing total advertising spend by overall sales.

ACoS = Total Ad Spend ÷ Total Sales

Ideally, you would have to understand this amount for each item, to comprehend which of your components performs well and bad. It is quite a tedious task to compute it in case you've got lots of SKUs. You will find amazon seller tools along with the ACoS calculator to help you with this calculation, which is generally utilized within this circumstance.

Does the ACoS is an Ideal Strategy?

ACoS is appropriate to an Advertisement Sped. Therefore, we often feel that their principal objective is to reduce their ACoS, which isn't correct. Sellers center on decreasing their ACoS as part of the campaign management plan. But, acquiring a minimal ACoS usually means that you're very most likely to depart profit lying around the table.

As an example, a seller includes a cooler whose profit margin is 30 percent. He or she buys about USD 100, obtains USD 1,000, and also possesses USD 700 at the prices. In cases like this, the vendor has ACoS of 10 percent and USD 200 gain on advertising sales.

In the same way, there's another vendor with exactly the identical cooler that has a profit margin of 30 percent. He/she spend approximately USD 2000 on advertisements and earn USD 10000 in earnings and USD 7000 in merchandise expenses. Having a 20 percent ACoS, this vendor creates a gain of USD 1,000 in their advertising sales.

Though the second vendors possess more ACoS, however, nevertheless made five times greater gain than the initial vendor. Also, considering that the increased earnings, organic positions of vendor B are very likely to be greater, thereby fostering their earnings opportunity. Thus, minimizing ACoS isn't necessarily a perfect strategy.