ServiceData & analytics
Commercial Analysis
Data-driven analysis of markets, performance, portfolio and economics – so the next decision rests on a clear picture rather than competing spreadsheets.
Method · Pricing & profitability
Profitability Model
A model of unit economics and profitability across market, channel and SKU – showing what drives profit and what happens under different scenarios.
What it is
The Profitability Model rebuilds the economics of each product from the bottom up: price, cost of goods, marketplace and payment fees, fulfilment and logistics, returns and advertising. The result is a contribution margin you can trust per product, channel and market.
Because the model is built on explicit assumptions, it can also show scenarios – a price change, a new fulfilment model or a different advertising target – before the decision is made.
When to use it: Use it when revenue grows but profit does not, before changing prices or channel models, or when you need to know which products fund growth elsewhere.
What goes in
- Prices
- Fees
- Cost of goods
- Advertising cost
- Logistics and returns
What you get
- A P&L view per product and channel
- Profit drivers
- Scenarios
How it works
- Map the cost chainList every cost from purchase price to delivered order, per channel.
- Build the modelCalculate contribution per product, channel and market.
- Find the driversIdentify the prices, fees and costs that move profit most.
- Run scenariosTest the effect of changes before committing to them.
Decisions this helps you make
- Improve marginPricing & profitability
- Assess unit economicsPricing & profitability
Typical KPIs
- Contribution margin
- TACoS
- Gross margin
Where this method is used
ServiceProfitability
Profitability Optimization
Improving unit economics and contribution margin – by making every cost between the factory gate and the customer visible, and deciding which levers to pull.
Knowledge and analysis
KnowledgeProfitability
Contribution margin on Amazon: what to include and why it changes decisions
Gross margin says little about profitability on marketplaces. Contribution margin – after fees, fulfilment, returns and advertising – is the number that should steer price, assortment…
Want to apply this to your business?
We can run a first assessment on your own data and show what the method would change in your decisions.