CM

On Amazon, Contribution Margin (CM) helps brands and vendors understand the real profit per unit sold, after subtracting all variable costs such as fulfillment fees, advertising, chargebacks, and other deductions.

Formula:

CM=(Average Selling Price−Average Cost per Unit+Contra-COGS−Variable Costs)​​/Average Selling Price

Components:

• Average Selling Price (ASP): Your product's average revenue per unit sold
• Average Cost per Unit (ACU): What it costs to produce or procure the product
• Contra-COGS: Deductions that reduce Cost of Goods Sold, like discounts or marketing support from vendors
• Variable Costs: Fees like FBA, shipping, packaging, and advertising

CM is often calculated and analyzed in Vendor Central or internal financial dashboards.

Why it matters:

• Indicates profitability per product before fixed costs
• Helps decide which products to scale, optimize, or phase out
• Important in Annual Vendor Negotiations (AVN) and profitability discussions with Amazon

💡 Example:
If a product sells for $20, costs $10 to produce, and incurs $5 in Amazon fees, the CM helps determine what’s left to cover other expenses or drive profit.

In short:
CM measures how profitable your product is per sale after Amazon fees and other variable costs — a key metric in managing margins and negotiating with Amazon.