I recently chatted with a friend who has been doing Amazon himself for almost a year, but has yet to make a profit.
Asked him if he knew the reason, he said that because the advertising fee of the product accounted for too much, there was no profit in the end.
I have also seen his products, which are basically under $10.
For such low-priced products, the absolute profit value is generally not too high. If you want to make money, you have to pick it up in various processes.
In our daily selection, many training teachers will teach us how to calculate the product profit margin, which is generally calculated as follows:
Profit margin = [product selling price - (purchasing cost + head-way fee + Amazon commission + FBA fee)] ÷ product selling price
When many novice sellers calculate the profit rate according to this formula, they feel that the product is making money.
First of all, this formula itself is not wrong, but we can't directly use this formula when we really choose products.
Because the scope it contains is not comprehensive enough.
For example, the seller mentioned above must have calculated the profit margin when he chose this product. But in the end, it was found that the advertising fee was high, and the result was a loss of money.
In addition, we also need to calculate the after-sales cost of the product, as well as the company's operating costs.
Many sellers will ask that there is no data to refer to in the early stage of these costs you mentioned.
But we can set a ratio for each module first, and if we find that we can still achieve our expected profit rate, we can try to do it.
Then in the process of product operation, adjustments should be made according to the actual data.
Products that make money will continue to intensify their efforts, and products that do not make money will be quickly cleared and left.
It is very important to summarize the experience in the operation process. Don't fall into the limitations of your own thinking.
Recognize the reality, in order to make faster and more accurate choices!