The profit waterfall
Think of every sale as a waterfall: the price flows in at the top, and each cost takes a cut on the way down. What reaches the bottom is your net profit.
The referral and fulfillment fees are Amazon's cut — the FBA fees guide breaks those down. The rest are yours to control: what you paid for the goods, what you spent advertising them, and what came back as refunds.
Why per-SKU, not per account
The single biggest mistake sellers make with profit is looking at it account-wide. An account-level margin averages every product together, so two strong performers can mask five that lose money on every order. You only find those by ranking net profit per SKU — then you know exactly what to scale, what to reprice, and what to discontinue.
The costs sellers forget to subtract
- Understated COGS — the unit cost is easy; the inbound freight and prep that landed it are easy to forget.
- Unattributed PPC — ad spend lives in a different report, so it rarely gets pinned to the SKU it sold.
- The refund admin fee — Amazon keeps a slice even after the customer is repaid, and the unit may come back unsellable.
- Storage — the rent your inventory pays every month it sits, higher in Q4 and on aged stock.
Margin and ROI are different questions
Once you have net profit, two ratios matter. Margin (net ÷ price) tells you how much of each revenue dollar you keep — the number to watch when you set price. ROI (net ÷ the cash you tied up in goods) tells you how hard your working capital is working — the number to watch when you decide what to reorder. A fat-margin product that turns slowly can be a worse use of cash than a thinner one that sells fast.
Stop doing it in a spreadsheet
The fees come straight from Amazon; the only number the system doesn't know is your cost of goods. Enter that once and per-SKU profit analytics computes net profit, margin and ROI after every fee, ad dollar and refund — with the trend charted next to it — so the loser hiding in your catalog average finally shows itself.
FAQ
Why isn't revenue my profit?+
Revenue is the price the customer paid — before Amazon's referral and fulfillment fees, the cost of the goods, the ad spend that won the sale, and any refunds. Net profit is what remains after all of those. On many products the gap between revenue and profit is 60–80% of the price.
What do I subtract to get net profit?+
Start at the sale price and subtract, in order: the referral fee, the FBA fulfillment fee, your landed cost of goods (manufacturing + inbound freight + prep), the PPC spend attributed to that SKU, and refunds (including the fee Amazon keeps). What's left is your net profit for that unit.
Why track profit per SKU instead of per account?+
Account-level margin averages your winners and losers together, so a couple of profitable products can hide several that lose money on every sale. Only per-SKU net profit tells you which listings to scale, reprice, or cut — the decisions that actually move your bottom line.
What's the difference between margin and ROI?+
Margin is net profit ÷ sale price — it tells you how much of each dollar of revenue you keep, which drives pricing. ROI is net profit ÷ the cash you tied up (cost of goods plus inbound) — it tells you how hard your working capital is working, which drives what to reorder. A high-margin product with slow cash turns can still be a worse use of money than a thinner-margin fast mover.