By Martin Heubel, Amazon Strategy Consultant at Consulterce
One of the questions I get asked in every workshop is: How is Amazon’s Net PPM calculated.
So let’s take a closer look at the definition of this metric.
To start, we need to identify the components of the Net Pure Profit Margin (Net PPM).
They are:
- Average Selling Price (ASP)
- Cost Price
- Trade Terms
- Sales Discount
To calculate the Net PPM, we use this formula:
(ASP – Cost Price + Terms – Sales Discount) / ASP * 100 = Net PPM %
Until late 2022, Amazon did not reflect the Sales Discount in ARA and Brand Analytics dashboards in Vendor Central.
Thankfully, Amazon has now added it to the new Retail Analytics dashboard.
So what is classified as a Sales Discount? – Any discount that shoppers redeem in the checkout process and not in the Buy Box.
This includes discounts from:
- Subscribe and Save
- Lightning Deals
- Spotlight Deals
- Coupons
Want an easy way to calculate your Net PPM?
Use my tried and tested Net PPM calculator available here
