Every Amazon brand needs to pass the same 5-point margin test before we touch a
By Brandon Fishman · August 8, 2026 · Curated by George's Blog
Every Amazon brand needs to pass the same 5-point margin test before we touch a single ad. Most fail at least two.
Here's the rubric:
1/ Gross margin above 70%
2/ Referral fee below 15% of selling price
3/ FBA cost below 12% of selling price
4/ TACoS below 20%
5/ Net margin after all four above 10%
Let me run 3 brands through it.
→ BRAND ONE: $15 supplement - F
Gross margin: 60%. Already below the floor.
Referral fee: $2.25 - 15%. Right at the limit.
FBA: $4.50 - 30% of selling price. Fails badly.
TACoS at 20%: another $3.
Total costs: $10.75 on a $15 product. Net margin: negative before a single unit ships.
This brand is paying Amazon to lose money.
→ BRAND TWO: $35 supplement - C
Gross margin: 70%. Passes.
Referral fee: $5.25 - 15%. Borderline.
FBA: $5 - 14%. Fails.
TACoS at 20%: $7.
COGS at 70% margin: $10.50.
Total costs: $27.75 on $35. Net margin: around 7%.
Survivable, but not a business.
→ BRAND THREE: $65 supplement - B
Gross margin: 72%. Passes.
Referral fee: $9.75 - 15%. Borderline.
FBA: $6 - 9%. Passes.
TACoS at 20%: $13.
COGS at 72% margin: $18.20.
Total costs: $46.95 on $65. Net margin: around 28%.
Now you have something to work with.
The pattern across all three:
FBA costs kill low-price products, TACoS kills thin-margin ones, and most brands are operating below the 70% gross margin floor without knowing it.
If you've never run this test on your catalog, run it today. Your P&L already knows the answer.