# Profit Margin Analysis — Output Template

## Executive Summary

**Analysis date**: [Date]
**Products analyzed**: [N] SKUs across [N] categories
**Channels covered**: [Amazon / Shopify / Wholesale / etc.]
**Data period**: [Start date] — [End date]
**Total revenue (period)**: $[amount]
**Total net contribution (period)**: $[amount]

### Portfolio Margin Snapshot

| Metric | Value |
|---|---|
| Revenue (annualized) | $[amount] |
| Gross margin (after COGS) | [%] |
| Net contribution margin (all variable costs) | [%] |
| Margin-positive SKUs | [N] of [N] ([%]) |
| Margin-negative SKUs | [N] ([% of revenue]) |
| Top margin leak (cost layer) | [Layer name] — $[annual impact] |
| Projected improvement (if all scenarios executed) | +$[amount] / +[X] percentage points |

---

## Cost Structure Breakdown

### Revenue Waterfall (Portfolio Level)

| Line Item | $ per Unit (Avg) | % of Revenue | Annual Total |
|---|---|---|---|
| Selling Price (Net) | $[X.XX] | 100.0% | $[amount] |
| − COGS (Landed) | $[X.XX] | [X.X%] | $[amount] |
| = Gross Margin | $[X.XX] | [X.X%] | $[amount] |
| − Referral / Marketplace Fee | $[X.XX] | [X.X%] | $[amount] |
| − Fulfillment / Pick-Pack-Ship | $[X.XX] | [X.X%] | $[amount] |
| − Payment Processing | $[X.XX] | [X.X%] | $[amount] |
| − Outbound Shipping (DTC) | $[X.XX] | [X.X%] | $[amount] |
| − Storage / Warehousing | $[X.XX] | [X.X%] | $[amount] |
| − Returns Processing | $[X.XX] | [X.X%] | $[amount] |
| − Advertising (Attributed) | $[X.XX] | [X.X%] | $[amount] |
| − Other Variable Costs | $[X.XX] | [X.X%] | $[amount] |
| = **Net Contribution Margin** | **$[X.XX]** | **[X.X%]** | **$[amount]** |

### Cost Layer Comparison by Channel

| Cost Layer | Amazon FBA | Amazon FBM | Shopify DTC | Wholesale |
|---|---|---|---|---|
| COGS | [X.X%] | [X.X%] | [X.X%] | [X.X%] |
| Marketplace / Platform Fee | [X.X%] | [X.X%] | [X.X%] | N/A |
| Fulfillment | [X.X%] | [X.X%] | [X.X%] | [X.X%] |
| Payment Processing | Included | [X.X%] | [X.X%] | [X.X%] |
| Shipping | Included | [X.X%] | [X.X%] | [X.X%] |
| Storage | [X.X%] | [X.X%] | [X.X%] | [X.X%] |
| Returns | [X.X%] | [X.X%] | [X.X%] | [X.X%] |
| Advertising | [X.X%] | [X.X%] | [X.X%] | [X.X%] |
| **Net Contribution** | **[X.X%]** | **[X.X%]** | **[X.X%]** | **[X.X%]** |

---

## Product-Level Margin Table

*Sort by Net Contribution Margin (ascending) to surface worst performers first, or by Contribution Dollars (descending) to highlight top profit drivers.*

| SKU / ASIN | Product Name | Channel | Selling Price | COGS | Gross Margin % | Platform Fee | Fulfillment | Ad Cost/Unit | Return Cost/Unit | Other Var. | Net Contribution $ | Net Contribution % | Margin Tier | Annual Contribution $ |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| [ID] | [Name] | [Channel] | $[X.XX] | $[X.XX] | [X.X%] | $[X.XX] | $[X.XX] | $[X.XX] | $[X.XX] | $[X.XX] | $[X.XX] | [X.X%] | [Tier] | $[amount] |

*Include all SKUs. For catalogs with 100+ SKUs, include the full table as an appendix and present the top 20 and bottom 20 in the main body.*

---

## Margin Distribution Analysis

### Tier Summary

| Margin Tier | Definition | SKU Count | % of SKUs | Revenue $ | % of Revenue | Contribution $ | % of Contribution |
|---|---|---|---|---|---|---|---|
| Strong | >25% net margin | [N] | [%] | $[amount] | [%] | $[amount] | [%] |
| Healthy | 15–25% net margin | [N] | [%] | $[amount] | [%] | $[amount] | [%] |
| Thin | 5–15% net margin | [N] | [%] | $[amount] | [%] | $[amount] | [%] |
| Breakeven | 0–5% net margin | [N] | [%] | $[amount] | [%] | $[amount] | [%] |
| Negative | <0% net margin | [N] | [%] | $[amount] | [%] | $[amount] | [%] |

### Pareto Analysis

| Segment | SKU Count | % of SKUs | Revenue Share | Contribution Share |
|---|---|---|---|---|
| Top 20% by contribution | [N] | 20% | [%] | [%] |
| Middle 60% | [N] | 60% | [%] | [%] |
| Bottom 20% | [N] | 20% | [%] | [%] |

### Margin by Category

| Category | SKU Count | Avg Net Margin | Revenue-Weighted Margin | Best SKU Margin | Worst SKU Margin |
|---|---|---|---|---|---|
| [Category] | [N] | [%] | [%] | [%] | [%] |

---

## Margin Leak Identification

*Ranked by annual dollar impact (highest first).*

| Rank | Leak Description | Affected SKUs | Cost Layer | Current Cost | Benchmark / Target | Annual Excess Cost | Root Cause |
|---|---|---|---|---|---|---|---|
| 1 | [Description] | [N] SKUs | [Layer] | $[X.XX]/unit | $[X.XX]/unit | $[amount] | [Cause] |
| 2 | [Description] | [N] SKUs | [Layer] | $[X.XX]/unit | $[X.XX]/unit | $[amount] | [Cause] |

### Margin Leak Detail

For each top leak:

**Leak #[N]: [Description]**
- **Affected products**: [List or count]
- **Current state**: [What is happening now]
- **Benchmark**: [What comparable products or categories achieve]
- **Annual impact**: $[amount] in excess cost
- **Root cause**: [Why this leak exists]
- **Recommended action**: [Specific fix]

---

## Improvement Scenarios

| Scenario | Lever | Affected SKUs | Margin Improvement per Unit | Annual Impact | Investment Required | Payback Period | Risk Level |
|---|---|---|---|---|---|---|---|
| 1 | [Lever] | [N] SKUs | +$[X.XX] | +$[amount]/yr | $[amount] | [N] months | [H/M/L] |
| 2 | [Lever] | [N] SKUs | +$[X.XX] | +$[amount]/yr | $[amount] | [N] months | [H/M/L] |

### Scenario Detail

For each scenario:

**Scenario [N]: [Title]**
- **Lever**: [What cost element is being improved]
- **Current state**: [Current cost or rate]
- **Target state**: [Projected cost or rate after improvement]
- **Assumptions**: [What must be true for this to work]
- **Per-unit impact**: [$ improvement per unit]
- **Annual impact**: $[amount] across [N] SKUs
- **Implementation**: [Steps to execute]
- **Risk / Tradeoff**: [What could go wrong or what you give up]
- **Timeline**: [How long to implement and see results]

### Combined Scenario Summary

| Metric | Current | After All Scenarios | Change |
|---|---|---|---|
| Net contribution margin % | [X.X%] | [X.X%] | +[X.X] pts |
| Annual contribution $ | $[amount] | $[amount] | +$[amount] |
| Margin-negative SKUs | [N] | [N] | −[N] |

---

## Constraint Validation

| Assumption | Validation Method | Status | Notes |
|---|---|---|---|
| COGS reduction achievable | Supplier quote / alternative sourcing | [Confirmed / Estimated / Unvalidated] | [Detail] |
| FBA tier change feasible | Dimensional check with new packaging | [Confirmed / Estimated / Unvalidated] | [Detail] |
| Return rate reduction realistic | Industry benchmark comparison | [Confirmed / Estimated / Unvalidated] | [Detail] |
| Ad efficiency gain sustainable | Historical trend / competitive analysis | [Confirmed / Estimated / Unvalidated] | [Detail] |
| Price increase absorable | Price elasticity / competitor pricing | [Confirmed / Estimated / Unvalidated] | [Detail] |

---

## Risk Register

| Risk | Likelihood | Impact | Affected Scenarios | Mitigation |
|---|---|---|---|---|
| COGS increase from tariff changes | [H/M/L] | [$ impact] | Scenarios [N] | Diversify supplier base, pre-buy inventory |
| Platform fee increases | [H/M/L] | [$ impact] | Scenarios [N] | Multi-channel diversification, DTC growth |
| Return rate increase from policy change | [H/M/L] | [$ impact] | Scenarios [N] | Monitor weekly, tighten return window |
| Ad cost inflation (rising CPCs) | [H/M/L] | [$ impact] | Scenarios [N] | Shift to organic/SEO, build email list |
| Competitor price pressure | [H/M/L] | [$ impact] | All | Differentiation, brand building, cost leadership |

---

## Methodology Notes

- **Fee schedules used**: [Amazon fee schedule effective date, Shopify plan tier, Stripe rate, etc.]
- **COGS source**: [Supplier invoices / ERP export / manual entry]
- **Ad attribution method**: [Last-click / campaign-level ASIN attribution / blended allocation]
- **Return cost calculation**: [Actual per-return cost / estimated from return rate × average processing cost]
- **Storage cost allocation**: [Monthly storage fee ÷ average units stored / allocated by cubic footage]
- **Overhead exclusions**: [List any costs excluded — e.g., SaaS tools, salaries, rent — and rationale for excluding]
- **Data limitations**: [Known gaps, estimates, or assumptions that affect accuracy]
- **Exchange rates**: [If applicable — rate used and date]

---

## Next Steps

1. [ ] Review margin-negative SKUs and decide: reprice, restructure, or discontinue by [date]
2. [ ] Obtain supplier quotes for COGS reduction on top-[N] SKUs by [date]
3. [ ] Test packaging dimension reduction on [N] FBA-tier-boundary SKUs by [date]
4. [ ] Audit ad campaigns on SKUs with ACoS above [X%] and reduce/reallocate spend by [date]
5. [ ] Implement listing improvements on high-return-rate SKUs by [date]
6. [ ] Set up monthly margin tracking dashboard with automated cost data feeds
7. [ ] Schedule quarterly margin review to track improvement scenario progress
8. [ ] Re-run full margin analysis in [N] months with updated cost data