A product can look profitable by one measure and weak by another. Check all three before you buy: each one catches a product the other two let through.
Three ways to measure
All three start from the same profit a unit: the selling price, less Amazon's fees, less your landed cost (what the unit costs you, plus prep and shipping to Amazon).
- Profit a unit is that amount in dollars. It protects you from products that earn a percent but too few dollars to be worth the handling: a 50% ROI on a $2 item is $1.
- ROI (return on investment) is profit a unit divided by your landed cost. It says how hard your cash works. ROI is what most wholesale buyers set first.
- Margin is profit a unit divided by the selling price. It says how much room the product has if the price drops. A thin margin turns into a loss after a small price cut.
What is a good ROI for wholesale?
There is no single answer, because ROI and speed go together. Many wholesale buyers look for at least 25% to 40% ROI on a product that sells through in a month or two, and accept less on a product that sells every day. A 20% ROI that you earn every month beats a 60% ROI that takes six months to sell, and pays storage the whole time.
So read ROI next to how fast the order sells. The PO Assistant sizes its suggested quantity from your share of the listing's monthly sales for the days an order should last, 45 by default, so a read that says "3 cases (36 units): about 45 days of your share" means an order that should sell through in about 45 days if sales and sellers hold. See what a read gives you.
Profit you need
Your minimums live in Buying preferences, in Settings and in the PO Assistant ⋯ menu on the side rail once a read is showing:
- Minimum ROI, 30% until you change it.
- Minimum profit per unit, such as $2.00.
There's no margin minimum there, so check margin yourself: under about 15%, a small price cut can take the whole profit.
Check a product at the price you expect when your stock sells, not only at today's. If the PO Assistant's Usual range on the chart sits below today's price, work your minimums at the bottom of that range too.
The PO Assistant uses your minimum ROI for its price asks: "Ask for $11.82" is the unit cost that reaches your minimum ROI at today's price. See Ask a supplier for a better price. Raising a minimum asks more of every supplier; lowering it lets in thinner products.
A worked example
A product sells for $24.99. Amazon's fees are $7.85. Your cost is $11.00 a unit plus $0.65 for prep and shipping, so your landed cost is $11.65.
- Profit a unit: $24.99 less $7.85 less $11.65 is $5.49.
- ROI: $5.49 divided by $11.65 is 47%.
- Margin: $5.49 divided by $24.99 is 22%.
With a 30% minimum ROI and $2.00 minimum profit in Buying preferences, and your own 15% line for margin, it clears all three. If the price falls to $21.99, fees drop a little to about $7.40, profit becomes $2.94, ROI 25% and margin 13%: it now misses both percentages, even though it still makes almost $3 a unit.
At $21.99, a landed cost of $11.22, so $10.57 from the supplier plus your $0.65, brings ROI back to 30%: that's the price to ask for.
For how each money column of the results table is worked out, see Fees, net profit, ROI, and margin.