PnL metrics calculation
The P&L calculation provides a detailed breakdown of revenue and expenses to assess profitability. Below are the key components, their relationships, and an important note on formula calculations.
Important Note: While formulas uses a sum, some metrics such as COGS, Amazon Fees, other expenses are entered as negative values. As a result, summing these values reduces the margin, aligning with standard accounting practices.
1. Product Sales (Level 2)
This Product Sales metric represents revenue generated from product sales, based directly on the sales itself.
2. Net Sales (Level 1)
Net Sales reflects revenue after factoring in all components contributing to Product Sales.
Components contributing to this value include:
Shipping Revenue
Discounts
Taxes
Refunds Total (which aggregates Refunds, Referral Fee Reimbursement, Refund Commission, Reimbursement, and other related adjustments)
Formula:
Net Sales = Product Sales + Shipping + Discounts + Refunds Total
3. Cost of Goods Sold (COGS) (Level 2)
COGS includes direct costs associated with producing and delivering products, such as:
Production Costs
Inbound Shipping Costs
Formula:
COGS = Production + Inbound Shipping
4. CM1 (Contribution Margin 1) (Level 1)
CM1 measures profitability after accounting for COGS.
Formula:
CM1 = Net Sales + COGS
5. Amazon Fees (Level 2)
Amazon Fees represent charges related to selling on the platform, including:
FBA Fees
Referral Fees
Coupon Payment Events
Storage Fees (including Long-Term Storage Fees)
Inbound Fees
Other Fees (e.g., FBA Disposal Fees, Subscriptions, Seller Deal Payments, Digital Service Fees)
Formula:
Amazon Fees = Sum of all applicable fee categories
6. CM2 (Contribution Margin 2) (Level 1)
CM2 measures profitability after accounting for Amazon Fees.
Formula:
CM2 = CM1 + Amazon Fees
7. Advertising (Level 2)
Advertising expenses reflect costs incurred for campaigns across various formats, including:
Ad Spend (Products)
Ad Spend (Brands)
Ad Spend (Video)
Ad Spend (Display)
Formula:
Advertising = Sum of all Ad Spend categories
8. CM3 (Contribution Margin 3) (Level 1)
CM3 measures profitability after accounting for advertising costs.
Formula:
CM3 = CM2 + Advertising
9. Other Expenses (Level 2)
Other Expenses include additional costs not directly tied to sales but necessary for running the business.
Formula:
Final CM3 = CM3 + Other Expenses