Calculating MSRP and MAP for Amazon – Part 2

Like a margin, you start finding a markup with your gross profit that is revenue minus cost of good sold. Then find the percentage of the cost of good sold that is gross profit. Using the previous example, you sell each ASIN for $200. The ASIN costs you $150. First find the gross profit. That is $200 minus $150 is equal to $50 gross profit to write the markup as a percentage divide the gross profit by the cost of goods sold as opposed to the revenue sales price.

That is $50 divided by $150 is equal to 0.3, three markup to make the markup a percentage, multiply the result by a hundred that. Point three, three multiplied by a hundred equals 33% markup. The markup is 33%. That means you sold the ASIN for 33% more than the amount you paid for it. Markup measures how much more you sell your items for than the amount you pay for them.

The higher the markup, the more revenue you keep when you make a sale. Since we are looking at a basic of a hundred percent return on investment, your markup calculations would then be as follows $450 less $150 equals $300 gross profit, which works out to $300 divided by $150 equals a markup of 200%.

Generally speaking. Amazon will allow a markup on their cost from you of between 250% and 300%. So you can look at selling the above example for $600 on Amazon. Remember, however that you will not be getting the revenue from these sales, Amazon will, as they own your product. Once they bought it through your purchase order cycle on vendor central, the main reasons for calculating your MSRP are as follow.

It remains the same or is close to your MSRP for other distribution channels. So consumers become accustomed to the same pricing and Amazon doesn’t end up monopolizing your sales and you end up fighting with your other customers. That is your other distributors and wholesalers. You give your brand a premium status by not offering a lower MSRP to Amazon consumer.

That is you maintain your brand value on Amazon, regardless of any discounts or promotions that your products later receive on Amazon. And finally you offer Amazon a chunky profit if they sell your product, as well as give them plenty of leg room for daily deals, etc, therefore your final calculated spreadsheet would look like this.