Pricing And Profit Management
This automatically calculates the minimum and maximum prices based on real-time costs and business rules.
1. The Strategy-Based Pricing Model
Instead of a single price, every SKU can have multiple Strategies depending on its stock status:
- FBA Strategy: Used when the item is physically present in Amazon's warehouse.
- SFP Strategy (Seller Fulfilled Prime): Used when Amazon stock is out, but you have stock in your local warehouse.
- Backorder Strategy: Used when you are out of stock everywhere but have a confirmed incoming shipment from a supplier.
- Default Strategy: A fallback used if none of the above conditions are met.
2. Dynamic Cost Synchronization
The "Calculated Min Price" is built from the ground up using live data. Each cost component in a strategy can be synced in four ways:
| Sync Source | How it works | Business Use Case |
|---|---|---|
| Supplier-Sync | Picks the price from your Top Ranked available supplier. | Ensures your price moves down if your supplier gives you a better deal. |
| PO-Sync | Uses the actual rate from your most recent Purchase Order. | Bases your price on the exact "last buy" cost. |
| FBA-Transfer | Pulls the Landed Cost from the last FBA shipment. | Best for FBA items where shipping to Amazon is a major cost. |
| Auto-Sync | Pulls a Default Value (e.g., standard packaging or overhead). | Standardizes fixed costs across many items. |
| Amazon-Sync | Pulls the Estimated FBA Fee from Amazon | Pulls the Estimated FBA Fee from Amazon |
3. The Price Calculation Formula
The system uses a mathematical formula to find the price that guarantees your desired Min Margin.
**Price = (Total Absolute Costs) / (1 - (Relative Costs % + VAT % + Desired Margin % + Commission Adjustment %))**
- Absolute Costs: Fixed amounts like purchase cost, inbound shipping, and packaging fees.
- Relative Costs: Costs that are a percentage of the final price (e.g., Amazon standard referral fee).
- VAT Logic: The system automatically extracts VAT from the final price to ensure the margin is calculated on the "Net Revenue."
4. The "High Price" Commission Rule
Amazon often changes its commission rates based on the price. The system handles this automatically:
- The Threshold: Usually set to £10 (configurable in Navgold Settings).
- The Adjustment: If the calculated price exceeds this threshold, the system automatically adds an extra commission percentage (e.g., +7%) to the formula and recalculates the price to protect your margin.
5. Automatic Strategy Selection (The Selector)
The system "thinks" for itself to decide which strategy to use for a listing:
- Check FBA: If there is stock in the AFN (Amazon) warehouse -> FBA Strategy.
- Check Local Stock: If FBA is empty but local warehouse has stock or there is an open Purchase Order with a delivery date -> SFP Strategy.
- Check Incoming: If everything is empty but supplier has stock -> Backorder Strategy.
- Fallback: Use the Default Strategy.
6. Real-time Profit Simulator
In the Amazon Product Strategy form, users can enter a "Target Price". The system will instantly show:
- Calculated Margin: The exact percentage of profit you will keep at that price.
- Calculated Profit: The exact amount (e.g., £2.50) you will make after all costs and Amazon fees.
This allows pricing analysts to "test" a price before submitting it to Amazon.