What is the unit cost parameter and how does Splitly calculate profits?
To calculate profits, we need two pieces of information: the total revenue and a breakdown of your product costs. Amazon's costs can be broken down:
- Per order fee
- Per unit fee
- Weight based fee
- Referral fee
The per order fee and per unit fee are different. This is because there can be multiple units in a single order. This makes it a little bit cheaper for Amazon, because units can be shipped together. This cost saving is usually reflected to customers and sellers on Amazon. The weight based fee is very simple to understand. More heavier goods are more costly to deal with. And Amazons referral fee is the percentage (usually 15% but not always) Amazon charges you for using their service.
Then there's the unit cost, which is what you enter when creating a test. The unit cost is the amount it has cost you to manufacture and ship the product. It should not include any of the fees above. We already know what Amazons fees are for your products, we just don't know how much money you have spent on manufacturing and shipping per unit. It is important you enter this value correctly, otherwise incorrect profit values will be displayed in Splitly.