50% gross margin, sounds healthy Here's an illustrative example that shows why t
By Ant Finch · October 7, 2026 · Curated by George's Blog
50% gross margin, sounds healthy
Here's an illustrative example that shows why that number on its own doesn't tell you much..
Invoiced sales: £850,000
Less COGS: £425,000
Gross margin: £425,000, or 50%
Looks like a strong account so far.
Less terms: £127,000
Less promo funding and advertising: £86,000
Less chargebacks: £17,000
Total Amazon deductions: £230,000
Amazon channel contribution margin: £195,000. 22.9%.
Against a 30% target, that's a 7 point gap.
This also excludes any operational costs to get to your true net margin.
Nobody sees the gap looking at the gross margin, because it won't move unless your invoice price or COGS change.
This is why sales are up and margin looks fine and sales are up and margin is fine are too different things.
The first is from gross margin.
The second needs the full cost..,terms, promo, ads, chargebacks, all stacked vs what you really earn.
If you only report gross margin upward, you're reporting the number that hides the most.
What's the gap between your gross margin % and your actual net margin %?
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