Many brands judge Amazon on top-line revenue and a blended TACoS. Both hide the products that are quietly losing money. The fix is an honest contribution margin for every ASIN.
Why blended numbers mislead
A healthy account-level TACoS can sit on top of a catalog where a few hero products carry everything and a long tail loses money on every unit. Blending hides the subsidy. So does looking only at revenue, which ignores the costs that scale with each sale.
A healthy blended TACoS can hide a catalog full of losers.
The costs that belong in the model
A useful ASIN-level contribution margin starts with net revenue and subtracts every cost that moves with that product:
- Cost of goods, landed, including freight and duties.
- Referral fees charged on each sale.
- FBA fulfillment fees, which depend on size and weight tier.
- Storage, including monthly fees and aged inventory surcharges.
- Returns, including refunds, return processing, and unsellable units.
- Advertising attributed to the ASIN, not spread evenly across the catalog.
- Promotions and coupons, which are a real cost even when they do not look like one.
Allocating shared costs honestly
Some costs do not map cleanly to a single product. Brand-level campaigns, prep, and inbound shipping need a consistent allocation rule. The specific rule matters less than applying it consistently, so that products can be compared fairly over time.
Account for the halo
Amazon does not exist in isolation. Amazon presence can lift branded search, retail sell-through, and sales on your own site, while sometimes shifting customers away from it. A complete view estimates both directions, using tools such as Amazon Attribution for off-Amazon traffic and your own data for changes in DTC behavior.
What the model unlocks
Once every ASIN has an honest margin, decisions get clearer:
- Which products deserve more ad investment, and which should be capped.
- Where packaging or size changes would move a product into a cheaper fee tier.
- Which variations to consolidate or discontinue.
- Where price increases are justified by economics rather than guesswork.
Revenue tells you how big the channel is. Contribution margin by ASIN tells you whether it is a business.