Back in Module 0 we made a claim that probably stuck with you: your healthy-looking overall margin is hiding products that lose money. This is the module where you stop taking that on faith and actually see them — your own catalog, ranked, with the losers flagged.
This is the per-SKU truth the whole course has been building toward. Let’s read it.
The number you’re reading, in plain English
sl_daily_sku_profit gives you profit for each product. The formula underneath it is:
payout − (units sold × your COGS) − storage − ads
The one thing that trips people up: payout already has Amazon’s fees taken out. It’s what Amazon actually paid you, net of the referral and fulfillment fees. So you don’t subtract those fees again — they’re already gone. From there you subtract your product cost (the COGS you entered in Module 1, which is why that step came first), then subtract your storage and ad spend. What’s left is real per-SKU profit.
(One technical aside for the curious: in the raw data, the storage and ad columns are stored as negative numbers, so the underlying view literally adds them. We’ve written it as subtraction here because that’s what’s actually happening to your money — you’re paying for storage and ads. Same result either way.)
If you skipped Module 1 and your COGS is still the 25% placeholder, this number is still a guess. Enter your real costs first, then trust this.
Keep, Kill, or Cuddle
Once you can see profit per product, every SKU sorts into one of three buckets.
- Keep — healthy, consistent margin. Leave it alone and protect it. These are paying for everything else.
- Kill — persistently negative. You are paying Amazon to sell this. Unless there’s a strategic reason (a loss-leader, a bundle anchor), stop the bleed: raise price, cut ad spend, or discontinue.
- Cuddle — promising but not there yet. Decent demand, but the margin’s thin or the ads are too hungry. These need attention, not abandonment — a price test, tighter ad targeting, a COGS renegotiation. (How to systematically work a cuddle list is a Level 2 topic; for now, just flag them.)
The goal of this module isn’t to fix every product today. It’s to know which bucket each one is in — something the top-line number can never tell you.
Why the average lied to you
Here’s the proof behind the Module 0 hook. Account-level averages hide loss-makers because that’s what averages do — winners carry losers, and the blended number looks fine.
To see the size of the gap: a product quoted at a 40% gross margin can easily net down into the low teens once every fee and ad dollar is in, and a 20%-margin product can fall toward single digits after PPC alone. (Those are illustrative — your exact compression depends on your fees and ad spend — but the direction is always the same: net is a lot lower than gross.) An account showing a healthy overall margin can absolutely contain individual SKUs running negative, and you’d never know from the average. Per-SKU profit is the only place they show themselves.
Three numbers worth knowing per product
You don’t need to master these today, but you’ll see them on the SKU view, so here’s what they mean:
- ACoS (Advertising Cost of Sales) — ad spend ÷ sales from those ads. It measures how efficient the ads themselves are. Your break-even ACoS (sometimes called “Max ACoS”) is the ceiling where an ad-driven sale makes exactly $0 — spend past it and that sale loses money.
- TACoS (Total ACoS) — ad spend ÷ total sales, including organic. This tells you whether the product is healthy underneath the advertising, or whether ads are the only thing holding it up. A low, stable TACoS is a good sign.
- Contribution margin — what’s left after COGS, fees, and ads. The bottom-line “did this product make money” figure.
Rough benchmarks to anchor on: 15-20% net margin is solid, 25%+ is strong, and below ~8% is a warning sign.
Try this in your account
Open Claude with the Amazon MCP Server connected and ask:
“Rank my SKUs by profit last month, highest to lowest, and flag any that are losing money.”
The bottom of that list is the conversation Module 0 promised you. Look at the flagged losers and ask the obvious next question for each one: keep, kill, or cuddle? You don’t have to act on all of them today — but for the first time, you can see exactly which products are carrying the account and which are quietly draining it.
Part 5 of 7 in Level 1: Understanding Amazon Profitability.
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