Net Profit
What is left of your revenue after every cost has been deducted: product cost, Amazon fees, advertising, refunds and operating expenses.
What Is Net Profit?
Net profit is the money a sale, a product or a business actually keeps once all costs are paid.
Net Profit = Revenue − COGS − Amazon Fees − Advertising − Refunds − Operating Expenses
A Worked Example
Take a product selling at $25.00. The figures below are illustrative and leave out storage, returns and overheads:
- Referral fee (15%): $3.75
- FBA fulfillment fee: $4.50
- Cost of goods, landed: $6.00
- Advertising per unit: $2.50
Net profit is $25.00 − $16.75 = $8.25 per unit, a net margin of 33%. Leave out advertising and the same product appears to earn $10.75, which is why partial profit figures mislead.
Net Profit vs Gross Profit
Gross profit deducts only the cost of the goods. Net profit deducts everything. On Amazon the gap between the two is wide, because fees and advertising are often larger than the product cost itself.
How SellerLegend Helps
SellerLegend calculates profit with COGS, FBA fees, PPC spend and all transaction types included, by product, settlement period and marketplace.
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