Blog, Amazon Vendors

List, Sales, and Cost Prices on Amazon: What’s the Difference?

Learn the key differences between List, Sales, and Cost Prices on Amazon, and how they impact vendor profitability. Understand NetPPM for optimized margins.

Author:

Benjamin Weyrich

When selling on Amazon, vendors encounter various pricing metrics that play a crucial role in determining profitability. These include the List Price, Cost Price, Adjusted Cost Price, Sales Price, and the closely related Net Pure Profit Margin (NetPPM).

Each price metric serves a unique purpose in the transaction process. Let’s dive into what these prices mean and how they impact profitability for vendors and Amazon.

1. List Price

The List Price is the initial price a vendor (manufacturer) offers Amazon for a product. This is the starting point for pricing negotiations, often visible in Amazon's Vendor Central. However, this price is rarely what Amazon ends up paying due to discounts and negotiated terms.

For example, the List Price for a bicycle could be set at 632€, but it usually differs from the Cost Price after deductions.

Schedule a personalized demo of CATAPULT & watch it action

BOOK DEMO

2. Cost Price

The Cost Price (or Cost of Goods Sold - COGS) is what Amazon actually pays the vendor after applying negotiated discounts and conditions. This price often fluctuates throughout the year, influenced by negotiations, volume, and other factors.

Using the bicycle example, while the List Price might be 632€, the Cost Price Amazon pays could be 467€. Importantly, Cost Price is not the final revenue vendors receive, as additional fees and deductions (such as co-op fees and rebates) come into play.

3. Sales Price

The Sales Price is the price the customer pays on Amazon when purchasing a product. It reflects Amazon’s pricing strategies, which aim to be competitive while maximizing profit. This price is always reported net of taxes.

For the same bicycle, the Sales Price might be 839,49€ (gross price 999€). Understanding the relationship between Sales Price and Cost Price is crucial for calculating profit margins.

4. Net Pure Profit Margin (NetPPM)

The Net Pure Profit Margin (NetPPM) is Amazon’s profit margin after accounting for all costs and deductions. A higher NetPPM indicates that the product is more profitable for Amazon. In contrast, low NetPPM can lead to Amazon reducing promotion or sales of the product if it becomes unprofitable, a scenario known as "CRaP-out" (Can’t Realize any Profit).

For instance, if the Sales Price is 839,49€ and the NetPPM is 52%, Amazon’s net profit from the sale would be 436,53€.

Expert Strategies to Maximize Profits & ROI on Amazon

Free webinar recording for Amazon vendors.

PLAY RECORDING

5. Adjusted Cost Price

The Adjusted Cost Price takes into account additional deductions beyond the initial Cost Price, such as discounts applied during checkout or promotional offers (e.g., coupons, Subscribe & Save). While this figure isn’t reported directly in Vendor Central, it’s essential for vendors to understand, as it helps optimize margins and overall profitability.

Conclusion

Understanding the differences between List Price, Cost Price, Sales Price, and NetPPM is essential for vendors aiming to optimize profitability on Amazon. By keeping a close eye on these metrics, vendors can negotiate better terms, set competitive prices, and ultimately improve their margins.

In summary:

List Price = Initial price offered by the vendor
Cost Price = Actual price Amazon pays after deductions
Sales Price = Price paid by the end customer
NetPPM = Amazon’s profit margin on each sale

By managing these pricing factors, vendors can strengthen their relationship with Amazon and enhance their profitability.

Putting the pieces together

Understanding these nuances enables better strategic decisions and can be enhanced by platforms like Catapult, which provides real-time, integrated data views across departments, crucial for manufacturers operating in multiple countries. Our tool, crafted with input from Amazon vendors, features a centralized dashboard that automatically converts Amazon data into a clear, actionable perspective on your performance.