Amazon profit should be calculated from contribution after fees, fulfillment, returns and marketing—not from the gap between product cost and selling price.
Key takeaways
- Separate fees from COGS
- Add returns reserve
- Calculate ad break-even
- Review category fee rules
A selling price is not profit. Build a margin model that includes product cost, marketplace fees, shipping, returns and advertising.
Start with landed product cost
Include manufacturing, customization and packaging required for the order.
Add marketplace fees
Referral and other charges can vary by category, market and seller setup, so use the latest applicable fee table.
Add fulfillment cost
Shipping, warehouse or handling expenses belong in the per-order model.
Reserve for returns
Do not assume every order stays delivered and fully recoverable.
Calculate advertising break-even
Maximum ad spend per order is limited by contribution available before marketing.
Recheck assumptions regularly
Fee schedules and real return behavior can change the economics.
Action checklist
- Separate fees from COGS
- Add returns reserve
- Calculate ad break-even
- Review category fee rules
