Companion to the lessons "Vetting the Numbers Before You Spend" and "Running the Loop: Reorders, Stockouts, and Storage Fees."
1. Landed cost per unit (five lines)
Line
Worked example
Your product
Unit price from the factory
$3.50
$
Packaging and labeling
(in line 5)
$
Freight divided across units (air runs 3-5x sea)
$1.20
$
Duty and tariff allowance (buffer line, not zero)
$1.00
$
Inspection and incidentals across units (~$100-300 per visit)
$0.30
$
Landed cost per unit
$6.00
$
Duty line: the duty-free de minimis threshold for China shipments ended May 2025; get your forwarder's landed duty quote in writing before paying the deposit.
2. Fee stack and margin per unit
Line
Worked example ($24.99 product)
Your product
Sale price
$24.99
$
Landed cost
-$6.00
-$
Referral fee (~15% of price)
-$3.75
-$
Fulfillment fee (standard size, ~$3-7)
-$5.00
-$
Storage and incidentals
-$1.00
-$
Ads at maturity (budget line; healthy total ad spend 5-15% of revenue)
-$4.00
-$
Margin per unit
$5.24 (~21% net)
$
Worked example from the lesson, labeled example arithmetic on verified fee inputs. Industry reports average net margins of 15-20%; the example sits a notch above.
3. ROI per loop and break-even ACOS
Formula
Worked example
Yours
ROI per loop = margin per unit / landed cost
$5.24 / $6.00 = ~87%
Break-even ACOS = margin before ads / price
$9.24 / $24.99 = ~37%
Decision band: a popular training program once set a 150% ROI floor (higher-capital era, kept as history); the modern lean floor is roughly 60-80% ROI before ordering. Below the band: renegotiate the unit price, find a lighter product, or kill it.
4. Cash-conversion tracker (one loop)
Stage
Benchmarks
Date logged
Deposit paid
~30% of order
Production complete
2-4 weeks
Freight booked; mode chosen
sea ~40 days / air 5-15 days door to door
Inventory received and sellable
receiving up to 2 weeks
First sale
order-to-first-sale commonly 2-3 months
Payout lands
settlement on Amazon's cadence, not yours
Reorder placed
pipeline 60-90 days door to shelf
5. Reorder point
Input
Worked example
Yours
Average daily units
8
Replenishment days (production 2-4 wks + ocean ~40 days + receiving up to 2 wks)
80
Safety stock (weeks)
2 (112 units)
Reorder point = daily units x days + safety
8 x 80 + 112 = ~750 units
Reorder when inventory in Amazon plus on the water drops below the reorder point. Running out decays rank; operators consistently report the climb back costs more than the inventory saved.