SKU Costing: Stop Losing Money on Low-Margin Items

SKU costing means tracking every cost tied to a single product. That includes product cost, platform fees, shipping, ads, and refunds. Most sellers only track product cost. Big mistake. For example: On Amazon, the referral fee is $3.20 per item. If you sell 1,000 units, that’s $3,200 in fees. But if you don’t track it per SKU, you won’t know which products are actually profitable. We switched to tracking everything in March. Since then, we’ve cut losses by 20%.

The biggest mistake? Ignoring hidden costs. Take Temu. Their seller profit margin is often 10-15% lower than Amazon’s. But most sellers only look at product cost and final price. They forget about Temu’s 15% commission, 3% payment processing fee, and $2.50 fulfillment fee per order. Add refunds and ads, and suddenly, your “profitable” SKU is bleeding cash. Another mistake? Not tracking multi-currency costs. If you sell on Shopify and Amazon, you’re dealing with USD, EUR, and GBP. Convert everything to your base currency—otherwise, you’ll miss cost spikes.

Start with your product cost. Then subtract platform fees, shipping, ads, and refunds. For example: If you sell an item for $20 on Amazon, your costs might look like this: $10 product cost, $3.20 referral fee, $2 shipping, $1.50 ads, and $0.50 refunds. Your true profit? $2.80. That’s a 14% margin. If you’re not tracking all these costs, you’re flying blind. We use Gomarginify to automate this. It connects to 10 marketplaces and shows us daily profit reports. No more surprises.

Most profit trackers are clunky and slow. We tried three before finding one that worked. Gomarginify was the only tool that gave us true net profit per SKU—revenue minus all costs. It also flags losing SKUs, low margins, and high refund rates. The daily email reports save us hours. If you’re still using spreadsheets, switch. Manual tracking is error-prone. And errors cost money. We lost $1,200 last quarter because of a miscalculated refund rate. Never again.