Updated: Apr 7, 2021
Amazon makes it so unnecessarily difficult to figure out if your efforts on the AMS platform are actually making you money or not. Personally, it would be impossible to log in and out of every author's KDP platform so I opt for the easy way out - focusing on a super low ACOS to ensure profitability. You can figure out your target ACOS here in my lates Amazon Ads Author Masterclass. I can be certain that with an ACOS (advertising cost of sale) of 40% most authors are breaking even, so I aim to keep it below that.
The advertising.amazon.com platform is notorious for over-reporting sales, counting multiple orders from a click instead of just one, and lagging by weeks. I remember one month, during the reporting period when I sent out reports (I usually report to my authors on the 1-3 of every month based on the advertising.amazon.com dashboard) and then Amazon upped sales for the whole month by about 30% on the 4th. Frustrating is an understatement but I doubt this is a top priority for Amazon, so for now, we will work with what we got.
But what about you? How can you, with easy access to your KDP dashboard, figure out if you’re making money or not? The goal of this article is to give you a step by step to look back and say, “Yes”, these ads are profitable or, “No” they are not. One thing to note is that you should wait 30 days after the end of the time period you want to pull data for so as to avoid the mistake I made above.
This will consist of logging into your advertising.amazon.com account to get your spend and your KDP account to view royalties.
I’ve heard there are other tools out there like BookReport: https://www.getbookreport.com/ that do an alright job at giving you more legit royalties quicker but I have not personally used the platform. At the end of this - if your ACOS is looking good, you may want to expand to Canada. For converting your selling keywords for German, Canadian, or Spanish market, I wrote this step by step on how to do so.
Step 1: Pull your ad spend for the month - this is usually more accurately reported on the advertising.amazon.com dashboard than sales are so I use the number they give us there but if you want to be exact, you can wait for the monthly invoice Amazon sends out which is also uploaded to the advertising.amazon.com platform under billing & payments.
The amount you spent for the period can be found in the upper right hand corner of the invoice.
Alright you’ve got how much money they billed you for so now it’s time to find out how much money they paid you. Here is the big kicker…..they don’t pay you for 60 days after the end of the month. You can find more information about Amazon's payment terms here: https://kdp.amazon.com/en_US/help/topic/G200641050 but here’s what that means in terms of when you can expect to see royalties.
What this means is that you won’t really know the exact impact of your Amazon Ads for a couple months. You can get a rough estimate from your advertising dashboard by assuming you’ll get 40% of the sales minus the cost of the ads, but the whole point of this article is to help you figure out exactly how much you made for a given month. When you do this rough math from the advertising dashboard you also aren’t accounting for the organic sales or Kindle Unlimited royalties that might increase due to better rankings but over the time I’ve been doing this, it’s usually not a large amount (unless you have a lot of books that a reader might also want to buy) so I wouldn’t bank on that making a huge difference.
Long story short here: Amazon Ads give you way better metrics than putting your book on a billboard on the pacific coast highway so with perspective, it is more transparent than traditional marketing but you still have to be willing to play the long game. Amazon Advertising is not for the weak of heart or for those who can’t afford to lose a few hundred dollars and not see a return for a few months, if any. Alright, enough of that lecture, back to your numbers.
Step 2: Log into your KDP dashboard (That place where you published your book)
Amazon gives you the ability to filter your results by marketplace, author, book, format, and title along with the time frame (which we’ll definitely use). This means if you want your royalties for an exact book, you can filter by that title. Once you’ve filtered what results you want to see, click the start and end dates that correlate with the start and end date of the invoice you pulled off of AMS.
Now scroll down to the bottom of your KDP report.
You will see this graph which gives you the royalties for those dates. Lower than expected? That’s because most people assume that Amazon gives you 60% for a paperback. What is less known is that Amazon then subtracts the cost of printing from your 60%.
If your paperback is selling for $14.95, your royalty is $8.97. Let’s say your cost of printing is $2.57. You’re actually making around 40% or $6.4 after the cost of printing is subtracted from your royalty. The good news is that the 70% you make from a Kindle is about 65% after the delivery fee is subtracted so that one is a lot closer to what you think you’re making.
Should we be mad about these perceived royalties vs. actual royalties? Maybe, maybe not. On one hand, after advertising costs, it makes it incredibly difficult to make a decent profit but on the other hand they are taking the place of the publisher and the book store which would leave you with around the same margins.
So that’s it, subtract your invoiced amount from the royalties earned and you just figures out if you made or lost money on your ads. Hopefully this clears it up a little and if you have any further questions - feel free to leave a comment below. Losing money on your ads? You may want to check out the Top 9 Reasons Why Amazon Ads fail. I would also strongly recommend ample amounts of product targeting, which I write about here.