Every engagement we start begins with the same spreadsheet, because until it exists nothing else anyone reports can be checked. Here is how to build it.
Start with what actually landed
Take one product. Sale price is what the customer paid, after any promotion, not your list price. Then subtract, in this order:
- Landed cost per unit, meaning manufacture plus freight plus duty plus inbound shipping to Amazon, divided by units. Not the factory invoice.
- Referral fee, which is category dependent and usually fifteen percent.
- FBA fulfilment fee for the size tier Amazon has you in, which is worth verifying rather than assuming.
- Monthly storage, allocated per unit by dividing the monthly storage cost for that ASIN by units sold that month.
- Returns cost, which is the refunded amount plus the return processing fee plus the value of anything unsellable, divided across all units sold.
- Advertising, allocated to that specific ASIN rather than spread evenly across the catalogue.
What is left is contribution margin per unit. Multiply by units and you have what the product contributes before your overhead.
The two lines people miss
Long term storage appears on the settlement report and not in most dashboards, and it lands on precisely the products you are least keen to look at. Include it or your slow movers will look better than they are.
Inbound placement and partial shipment fees are the other one. Since Amazon started charging for split shipments these have become material for anyone sending small, frequent consignments, and they belong in landed cost.
What usually happens next
The first time a brand sees this, something in the catalogue is negative. On a twenty four ASIN supplement account we found nine products losing money on every unit sold, two of which were in the top five by ad spend, which is a specific and expensive way to be busy.
The second thing that happens is that ranking by revenue and ranking by contribution stop matching. The product doing the most revenue is quite often third or fourth by actual contribution, and the budget usually follows revenue because that is the number on the dashboard.
Keep it current
The single biggest failure is building this once, in a burst of enthusiasm, and never updating landed cost. Freight moves. Currency moves. Amazon fee schedules change every year. A margin model built on last year cost of goods will confidently tell you the wrong thing, which is worse than not having one.
