Sales up, profit down: where Amazon margin goes

Know profit per unit after every cost

Gross margin isn't enough. Subtract Amazon's referral and fulfilment fees, advertising, returns, storage and the landed cost of the product. Outside the US and Canada, remember the price usually includes VAT or GST.

Do it monthly, per product. Small errors compound when you scale.

Keep a margin buffer

A thin margin leaves no room for a price war, a fee change or a bad month in advertising. Model what happens at a lower price or a higher ACoS before it happens.

Watch TACoS

If total ad spend grows faster than total sales, margin shrinks even when revenue rises. Check whether organic rank is slipping on your main terms.

Don't run out of stock

A stockout loses sales and often organic rank, which then has to be won back with ad spend. Plan reorders from sales velocity and lead times, with safety stock – and avoid overstock, which adds storage fees.

Modules for this stage

• Profit Simulator – See how price, cost, ad spend and conversion change profit and break-even.
• Reporting & Unit Economics – Sales, fees, ad spend, cost of goods and profit – by product and brand, with the change explained.
• Sales & Replenishment Forecast – How long your stock will last, when to reorder and how much – under several demand scenarios.

More guides

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• Competitors undercut my price
• Low organic traffic