Target ACOS = Margin before Ad Spend (Break-Even ACOS) - Target Margin after PPC
After substracting all costs, the margin for the product in this example (without costs for PPC) is at 20%.
It is therefore possible to to spend 20% of the revenue on ad spend without making losses.
Determining a Target ACOS thus depends on how much margin the product is targeting when PPC costs are included. In this example it was decided the margin should be at least 5%, so that the ACOS must not be higher than 15%. This is consequently the Target ACOS.
Calculation of Break Even ACOS within Profit Dashboard
In the Profit feature, simply click into a product to have the upper graphs adapt to that specific product's numbers only. If you select today's timeframe, it will definitely not include PPC costs.