While it may not seem like it, profitability and debt actually go hand in hand for an e-commerce seller. In this series from Seller Accountant, Tyler explains how understanding PAG can help you spot underperforming SKUs and how to be proactive when making decisions that affect your profitability.
When looking at your P&L, it’s important to know what categories make up this figure in your accounting.
- Landed COGS – includes factory invoice, duties, freight, tariffs
- Logistics charges – picking, packing, and shipping fees from either FBA, your third-party logistics, or your own native warehouse
- Merchant fees – for Amazon sellers, the 15% commission that Amazon gets paid; also includes Paypal fees, Shopify Pay fees, or any other credit card processing fees
- Credits or clawbacks – if you are selling your brand through a vendor partner like Wayfair
Once you’ve got your P&L set up with a solid PAG formula, you can use this information to monitor individual SKUs – including advertising expenditure and sales performance.