What is the margin-after-fees framework?
The margin-after-fees framework is a way of seeing what a marketplace SKU actually earns after everything the marketplace charges and everything the store spends to sell it there. It exists because marketplace consoles lead with gross sales and units, which are the numbers that rise when a store discounts, advertises heavily and pays high fees, and which say nothing about whether any of it made money. A SKU can be a best seller and a loss at the same time.
The Marketplace FTE on ftes.ai reports margin after fees per SKU as its headline in the Performance tab and is reviewed on it in the Targets tab.
What are the six inputs?
The framework has six inputs, five of which come from the marketplace's own reports and one, landed cost, from the owner. Each is listed on the report beside the result.
- Sale price: the price the customer paid, after any promotion or coupon the store funded.
- Referral fee: the marketplace's commission on the sale, which varies by category.
- Fulfillment fee: the marketplace's charge for picking, packing and shipping where it fulfills, or the store's own shipping cost where it does not.
- Storage: the marketplace's storage charge attributed to the SKU for the period, including any long-term storage surcharge.
- Attributed advertising: sponsored-ads spend attributed to the SKU for the period.
- Landed cost: what the product cost the store to acquire and bring to the warehouse, supplied by the owner.
How is it calculated, with a worked example?
Margin after fees per unit is the sale price less each of the five costs; margin for the period is that per-unit figure multiplied by units sold, and the margin rate is the per-unit margin divided by the price. A labelled worked example, illustrative only, with round numbers that are not any marketplace's actual fees: a SKU sells at forty. The referral fee is six, the fulfillment fee is seven, storage attributed is one, advertising attributed is five per unit sold, and landed cost is eighteen. Margin after fees is forty less six, seven, one, five and eighteen, which is three per unit.
The same SKU with advertising left out of the arithmetic shows eight per unit. That is the flip the framework exists to catch: the ads line is the one most reports omit, and it is often the difference between profit and loss.
Why does gross sales hide the loss?
Gross sales hides the loss because every action that raises it also raises costs the gross number does not subtract. A lower price raises units and lowers margin per unit. Heavier advertising raises units and raises attributed cost. Moving to marketplace fulfillment raises conversion and adds a fee. A console that leads with gross sales rewards all three, and a seller who manages to it will grow a channel that loses money faster.
Margin after fees reverses the incentive. It rewards a price that holds, advertising that converts at a margin, and fulfillment chosen by cost, which is what a channel run like a department should reward.
What decision does each losing SKU get?
The framework ends with a decision per SKU whose margin after fees is at or below zero, because a number without a decision is a dashboard. The Marketplace FTE proposes one of a small set: raise the price inside what demand allows and above the owner's floor; change the fulfillment method if the fee line is the problem; reduce or stop advertising if the ads line is; reduce stock held at the marketplace if storage is; or, where none of those recovers a margin, recommend removing the SKU from that marketplace. Each proposal shows the arithmetic with the change applied.
The owner decides. Removing a SKU from a channel is a strategy decision the FTE never makes on its own, and price changes wait for approval at every autonomy level.
How should the framework be applied month to month?
The framework is applied monthly on the month's marketplace reports, with the landed-cost sheet confirmed by the owner, and reported per SKU beside the previous month so the owner sees which SKUs moved and why. The Marketplace FTE's review shows the table, the inputs, the SKUs that lost money with their proposed decision, and the effect of decisions taken last month on this month's margin. Fee changes announced by the marketplace are applied from their effective date and noted.
The framework's limit is attribution of advertising: a marketplace attributes an ad sale to a SKU by its own model, and the report says which model it used. The limit is stated, not hidden, which is what makes the number one the owner can trust.