Advertising

Safe ACoS

The advertising cost a product can actually carry: the ACoS at which advertising consumes all of the product's margin after COGS, Amazon fees and returns.

Formula

\begin{array}{l} \textcolor{#FF8C5E}{\text{Safe ACoS \%}} \\ \quad = \dfrac{\begin{array}{r} \text{Net Revenue} - \text{COGS} \\ {} - \text{Amazon Fees} \\ {} - \text{Returns} \end{array}}{\text{Net Revenue}} \times 100 \end{array}

Safe ACoS % = (Net Revenue − COGS − Amazon Fees − Returns) ÷ Net Revenue × 100Per product. Extended by expected customer value over 1, 3, 6 or 12 months.

ACoS and TACoS are revenue ratios with no break-even. Safe ACoS supplies the break-even: spend under it and the product makes money on the sale; spend over it and it does not.

Clarisix computes Safe ACoS per ASIN from the product's own margin cascade, and at 1-, 3-, 6- and 12-month customer value, so that a product with strong repeat purchase or Subscribe & Save can justify a higher acquisition cost than a one-time purchase.

Related metrics in the product: acquisition ceiling, spend past break-even ACoS, and contribution per unit.

See the whole waterfall worked through.

Our guide walks all eight steps with real numbers: How to calculate Amazon net margin.

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Safe ACoS

Formula

Related terms