Your real margin per unit is the number that sums up everything you learned in the previous lessons in a single figure. It's the answer to the most important question for any product: how much do I keep for every unit I sell?
The calculation, with an example product
You take the sale price and subtract, in order. Each subtraction has its own source: it isn't an estimate, it's a figure you pull from somewhere.
Say you have a product you sell for $34.99, large standard, with a target TACoS of 20%.
| # | What you subtract | Where it comes from | Example |
|---|---|---|---|
| 1 | Referral fee | Price × your category's % (almost always 15%) | $5.25 |
| 2 | FBA fulfillment | By tier: large standard 2.5 to 2.75 lb, $10 to $50 band, with the 3.5% surcharge | $6.48 |
| 3 | Storage | Monthly storage cost / units sold per month | $0.35 |
| 4 | COGS | What you pay the manufacturer + packaging + labels | $7.00 |
| 5 | Landed cost | (Freight + tariffs + customs) / units in the order | $1.60 |
| 6 | PPC | Target TACoS × sale price | $7.00 |
| 7 | Returns | Estimated rate × (non-refunded referral + unsellable product) | $0.55 |
| 8 | Prorated fixed costs | (Account + software + other) / units sold | $0.45 |
| Net margin | Price − everything above = $34.99 − $28.68 | $6.31 |
That margin comes from a division you can repeat: $6.31 / $34.99 = 18.0%.
Look at the whole thing before arguing over a single cost
The column calculation hides what matters: which of the eight is eating your product.
Large standard product, target TACoS 20%, returns 3%
Two readings the list of subtractions doesn't give you:
Amazon takes $11.73 of the $34.99 between referral and FBA: $5.25 + $6.48 = $11.73. It's the product's biggest cost and the only one you don't negotiate: it changes if you change the box size or the category, not if you negotiate better.
PPC weighs the same as the product. The $7.00 in advertising equals the $7.00 you pay the manufacturer. Cutting COGS by 10% gives you back $0.70; cutting TACoS from 20% to 15% gives you back $1.75. When PPC weighs that much, the lever is conversion, not the supplier.
Margin isn't a number, it's a curve
The same product has three different margins depending on which phase it's in, and almost all of the difference comes from PPC.
Only TACoS changes: 35% at launch, 20% while growing, 12% once ranked
A product that leaves 3.0% at launch isn't a bad product: it's a product paying for its organic position. The mistake is projecting the business with month 1's margin, or buying inventory with month 12's.
The minimum viable margin
The minimum net margin that makes an FBA business viable depends on your context: the capital you invest, the risk you can take on and the volume you want to reach.
The benchmark is to aim for a minimum margin of 30% before PPC, which, with advertising already subtracted, comes to 10-15%. Below that, any problem (a fee increase, higher returns, a competitor cutting prices) makes the business unviable.
🔑 The two floors are chosen together, not separately, and the subtraction explains why: if you accept 20-25% before PPC and spend a mature TACoS of 10-15%, you end up at 5-15%, brushing the second floor from below. With 30% you end up at 15-20% and clear it. A first floor that's too low lets in products that are going to fail the later filter.
The example above leaves 38.0% before PPC and 18.0% after. It clears both filters comfortably, and that's why it's a product worth buying.
Key concept
Your real margin per unit is obtained by subtracting the eight costs from the sale price one after another. The minimum viable for a sustainable FBA business is 30% before PPC and 10-15% after. And it isn't a fixed number: the same product leaves 3.0% at launch and 26.0% once ranked, because TACoS is what moves the most.
What to remember
- The calculation takes eight subtractions: referral, FBA, storage, COGS, landed cost, PPC, returns and fixed costs
- Target TACoS is the most practical way to estimate PPC cost per unit
- Amazon takes referral + FBA, and that block isn't negotiable: you change it with size and category
- When PPC weighs as much as COGS, the lever is conversion, not the supplier
- There are two floors, not one: 30% before PPC and 10-15% after, and they're chosen together
- If net margin doesn't reach 15% in the projection, reconsider the product before investing