Ask most businesses what their Amazon Vendor margin is, and they will quote you the figure from the purchase order. That number is almost always wrong — and usually wrong in the direction that flatters the product.
The deduction stack
Between the PO value and the cash you keep sits a series of deductions that vary by agreement and by month: co-op allowances, freight allowances, damage and shortage claims, compliance chargebacks, marketing development funds, and price-protection adjustments. Individually they look minor. Stacked together across a year, they routinely turn a 25% headline margin into something closer to 12–15% net — and on some lines, into a loss.
Why it stays hidden
The deductions do not arrive as a single line you can see. They are spread across remittances, claimed weeks or months after the sale, and described in language designed to be accepted rather than scrutinised. Unless you reconcile every deduction back to the original invoice, product by product, you never see the true number. Most businesses do not — they simply bank the net figure and assume it reflects normal trading.
Calculate it properly, decide accordingly
Once you map every cost against each product's selling price, the commercial picture sharpens immediately. Some products are far more profitable than you thought; others are quietly losing money on every PO. That knowledge changes what you push, what you reprice, what you dispute, and in some cases what you stop supplying through Vendor altogether.
We built our Amazon Vendor margin calculator to do exactly this — strip out the deductions and show your true net margin per product. It is the same first step we take with every Amazon client, because every other decision depends on getting this number right.
FOR YOUR BUSINESS?