Features
If your goal is to increase your total sales by as much as possible, then running your ads at breakeven (or even at a loss!) is one of the best ways to do this.
Why? The answer lies in how Amazon's A9 algorithm ranks products. Essentially, the more your product sells, the higher it ranks. Higher rankings, in turn, drive more organic (non-advertising) sales, helping to push your product's rank higher.
There is also the review factor. The more sales your product gets, the more reviews it gets, leading to higher conversion rates and, in turn, higher sales.
In short, if you can afford to run your ads at breakeven, then it is one of the quickest ways to have your best year yet on Amazon!
The breakeven ACoS is calculated by first figuring out your unit profit. For Merch products, it's simply your royalties. For physical products, it will be your product's sales price, minus your cost of goods, minus your Amazon fees.
If you are selling a t-shirt for $20 with a $3 unit profit, then you know you can spend $3 per sale in ads to breakeven (because your $3 unit profit - your $3 in advertising per sale = $0 net profit).
Your breakeven ACoS is then your unit profit divided by your sales price, or $3 unit profit / $20 sale price = 0.15 = 15%.
