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Understanding SKU Economics
Understanding SKU Economics

SKU Economics is a tool to help you analyze the profitability of your Amazon catalog. This guide will walk you through the basics.

Lisa Jones avatar
Written by Lisa Jones
Updated over a week ago

SKU Economics is an essential tool for Amazon sellers aiming to enhance profitability. By providing detailed insights and optimization opportunities, it empowers you to make data-driven decisions for your business.

How SKU Economics Works

SKU Economics is a tool designed to analyze the profitability of individual products (SKUs) in your Amazon inventory. Initially, it assumes the Cost of Goods Sold (COGS) as 25% of the sales price for each product. You can update this to reflect the actual COGS by editing it in the Financial view of the Products Catalog inside your Seller Labs account. SKU Economics then calculates profitability by factoring in costs like advertising and Amazon fees. It tracks this data historically, providing insights into trends and allowing you to optimize pricing, marketing, and inventory strategies based on accurate profitability analysis.

Benefits of SKU Economics

Detailed Insights:

Get a clear view of the profitability of each SKU.

Optimization Opportunities:

Identify areas to optimize pricing, marketing, and inventory.

Data-Driven Decisions:

Use the insights to make informed decisions that maximize profitability.

User Stories

  1. Advertising Spend Optimization:

    • A customer was spending $700-$800 a month on advertising for a product making only $15. Using SKU Economics, they identified the issue and adjusted their advertising spend accordingly.

  2. Analyzing Product Profitability:

    • Another user found that their top seller was losing money, despite overall profitability. This highlighted the importance of analyzing individual product profitability.

  3. Profit Simulator:

    • Based on user feedback, we developed the Profit Simulator tab, allowing you to select a percentage of the sales price for all SKUs to simulate profit. This improvement helps users understand profitability better and make data-driven decisions.

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