by Thomas Herold
For book authors using the Amazon advertising system, the ACoS is the critical number you need to know, in order to determine if your ad campaign is successful.
Amazon gives you the ACoS as a measurement of the performance on your ads. The lower the ACoS, the better performs your ad campaign and the more money you make.
The ACoS is calculated by using the cost of spending and dividing it by sales.
Let assume your paperback sells for $14.95 and you sell five copies per day. That’s $74.75 in gross sales for this day. Now, let’s further assume that you spent $25 in advertising for this day. To calculate your ACoS, you divide $25 by $74.75 and multiplicate it by 100 to get it in percentage. Your ACoS for this example is 33,4%.
This number doesn’t tell you anything until you have figured out your break-even point. The break-even point can be defined as a point where total costs (expenses) and total sales (revenue) are equal.
Let’s presume your paperback royalty on your book is $4.83. You will find this number in your KDP bookshelf under the third tab Paperback Rights & Pricing.
This example is based on 60% paperback royalty and 274 pages. If you use the Paperback calculator and enter these numbers you will get the break-even point of 32.3%. Now you can compare the break-even point with the ACoS from Amazon.
In our example above Amazon reported an ACOs of 33.4%. Our break-even point is lower than that with 32.3%. We hardly make any money – basically we just break-even.
In order to profit from the ad campaign, the ACoS needs to be lower than our break-even point!
For this reason, we have developed the royalty and break-even calculator for Kindle, paperback, and book summary. It is part of the Book Ad Report dashboard.
Enter your paperback sales price and your page count. You will see your royalty and break-even point automatically on the right side. This calculator is interactive – just change any number and you’ll see the result immediately.
The paperback royalty in the US is 60% and for the extended distribution 40%. From that, you have to deduct the printing cost based on the b&w/color option and page count.
For example, here’s how Amazon calculates the printing cost of a 300-page black ink paperback sold on the US marketplace:
$0.85 (fixed cost) + (300 (page count) * $0.012 (per page Cost)) = $4.45 (printing cost).
Enter your Kindle sales price and your file size, then choose your royalty plan.
You’ll find the file size in your KDP bookshelf under the third tab Kindle Ebook Pricing. Don’t use the file size on your Amazon book page, which usually shows a bigger file size.
You will see your royalty and break-even point automatically on the right side. This calculator is interactive – just change any number and you’ll see the result immediately.
The Kindle royalty is either 35% or 70%. If you are on the 70% royalty plan you pay an extra delivery fee based on the file size of your ebook. In the US this is $0.15 per MB.
Please keep in mind, that when you sell your ebooks to customers outside of the US a sales tax applies. See the list by country here.
If you sell Paperback and Kindle books you want to know your ‘overall’ break-even point from these two combined numbers. Fill in both numbers and then calculate from your past month the ratio between Paperback sales and Kindle sales.
For example, if you sold last month 100 Kindle books and 100 Paperback books than your ration is 50%:50%. Simply change the slider to the ratio and you will see your final overall break-even point.
How to Calculate the Ratio
1. Add your Kindle and Paperback sales together
2. Divide the number by 100
3. Use that number as a divider for your Kindle or Paperback sales
Kindle Ratio = Kindle / ((Kindle + Paperback) / 100)
Paperback Ratio = Paperback / ((Kindle + Paperback) / 100)