From Net PPM Theory to Action: How to Systemise Profitability on Amazon

BLOG: Retail

4 MIN READ | SEPTEMBER, 2025 | BY Benjamin Weyrich

On Amazon, revenue growth alone no longer guarantees success—profitability does. For 1P vendors, Amazon’s Net Pure Profit Margin (Net PPM) is the primary metric Amazon uses to evaluate a vendor’s contribution. This metric reveals whether each product is truly beneficial for Amazon’s bottom line. Vendors who understand, monitor, and act on Net PPM can avoid costly surprises like CRaP-out (“Can’t Realize any Profit”) and secure long-term growth.

Why Amazon Puts Net PPM at the Center

Amazon operates its retail business with a laser focus on profitability. Products that fail to meet profitability thresholds risk losing A+ content, buy box priority, advertising eligibility, or even their listings entirely.

Unlike other B2B platforms, Amazon is transparent: vendors can access detailed cost, margin, and sales data. This makes Net PPM not just a financial metric but a strategic negotiation tool. Keeping this margin healthy protects your assortment and strengthens your standing with Amazon.

How to Calculate Net PPM Correctly

Formula

Net PPM is Amazon’s communicated product-level margin:

Net PPM (%) = (Shipped Revenue – Shipped COGS – Vendor Terms) ÷ Shipped Revenue

Where:

Shipped Revenue = Total revenue for shipped units.
Shipped COGS = Amazon’s purchase cost for the product (based on manufacturing, not sourcing data).
Vendor Terms = Deductions like co-op fees, freight, chargebacks, and discounts.

KEY NOTE

Net PPM does not include Amazon’s operational fulfillment costs (approx. €3 per unit on average). Vendors should calculate Adjusted Net Pure Profit per Unit by subtracting estimated operational costs.

Example

Shipped Revenue: €1,000,000
Net PPM: 25%
Total Net Pure Profit: €1,000,000 × 25% = €250,000
Units Shipped: 50,000
Net Pure Profit per Unit: €250,000 ÷ 50,000 = €5
Adjusted Net Pure Profit per Unit: €5 – €3 (fulfillment) = €2 (if this figure is negative, the ASIN is at risk of CRaP-out)

CRaP-Out: The Real Risk

When a product is structurally unprofitable, Amazon begins CRaP-out measures:

Removal of A+ Premium content

Advertising

restrictions

Buy Box

suppression

Offer

delisting

Once delisted, restoring listings is slow and costly. Vendors who act proactively with Net PPM insights can prevent these losses.

amazon vendor checklist

SIX WAYS TO WIN THE AMAZON BUY BOX

What is Amazon Buy Box, how does it work, and what should you do to win it?

DOWNLOAD FOR FREE

How Often Should You Review Profitability?

Amazon’s pricing, promotions, and operational deductions fluctuate constantly. A monthly review of Net PPM per ASIN is recommended for high-revenue or at-risk products. Regular analysis allows vendors to:

Spot trends early
Intervene before profitability issues escalate
Support pricing and negotiation strategies with data

A Step-by-Step Profitability Checklist

To professionalize profitability management:

Spot Early Warning Signs: Track declining Net PPM and Net Pure Profit per Unit.

Fix Root Causes: Address high return rates, reduce chargebacks, and streamline supply chain inefficiencies.

Smart Promotions: Focus on retail promotions that lift both margin and volume.

Portfolio Rebalancing: Bundle products, create multipacks, or delist low-value SKUs.

Price and Visibility Management: Monitor 3P sellers and pricing parity to avoid erosion of margins.

Professionalizing Profitability with CATAPULT

Manual spreadsheets can’t keep up with Amazon’s pace. CATAPULT enables vendors to transform profitability management into a daily discipline:

Real-Time Net PPM Tracking: Automated, ASIN-level updates for instant clarity.
Root Cause Analysis: Identify whether returns, chargebacks, or discounts drive margin losses.
Scenario Planning: Simulate negotiation outcomes, new promotions, or portfolio shifts.
Negotiation Readiness: Back discussions with precise profitability data to gain leverage.

CATAPULT's analytics platform helps vendors move from reactive reporting to proactive margin management.

Key Takeaways

Master the Numbers: Track Net Pure Profit per Unit and factor in operational costs to see true profitability.
Prevent CRaP-Out: Early intervention protects visibility, advertising eligibility, and revenue.
Strategic Portfolio Decisions: Use Net PPM data to delist weak SKUs and strengthen profitable ones.
Invest in Tools: CATAPULT simplifies complexity, enabling daily profitability insights and strategic action.

Profitability isn’t just a metric—it’s the foundation of a sustainable Amazon business. By combining a deep understanding of Net PPM with actionable analytics, brands can secure growth while keeping Amazon invested in their success.

About the author

Benjamin Weyrich

He is the Founder and Managing Director of CATAPULT. With around ten years of experience in ecommerce and business intelligence, he focuses on strategic consulting for global brands aiming to strengthen their market position both on and beyond Amazon. Through his deep expertise, he helps companies make data-driven decisions and scale their growth across digital channels.