Are You Really Making a Profit on Each Sale? Key Takeaways from the Amazon Seller School Podcast

In this insightful post, Tyler Jeffcoat from Seller Accountant, uncovers the hidden truths about what really drives profits for Amazon sellers—spoiler: it’s not just about selling more units.

As a handmade seller, you’ve likely asked yourself, “Am I really making a profit on every sale?” If you think the answer is yes just because you're selling units, think again. On a recent episode of the Amazon Seller School podcast, I sat down with Tyler Jeffcoat from Seller Accountant to dig deep into the real drivers of profit for Amazon sellers, and his insights are eye-opening.

If you’re running your handmade business on Amazon, it’s crucial to look beyond just moving inventory. Tyler explains that it’s not about selling as many units as possible but about ensuring that each sale is actually profitable.

He asks a simple but powerful question:

“Do I make money every time I sell a unit?”

This is what he refers to as unit economics—understanding whether each sale adds to your bottom line or just feels like a win on paper. Let's break down some of the major takeaways from this conversation that every handmade seller should consider.

1. Selling More Doesn’t Mean More Profit

It’s easy to get caught up in the idea that selling more products will automatically translate to more profit. But Tyler stresses that profitability is about much more than just moving units. You need to evaluate whether the sale of each item is actually making you money once all the costs are accounted for.

Many sellers are flying blind with their numbers, only looking at gross revenue without diving into the details of their costs. Ask yourself:

• What’s the cost of goods sold (COGS)?

• How much are you spending on advertising?

• Are you tracking the right KPIs to understand real profit?

  
  

If you aren’t calculating these factors, you could be unknowingly losing money on every sale.

2. Post-Advertising Gross Profit (PAG) Is Critical

One of the most important metrics Tyler mentioned is post-advertising gross profit (PAG). This metric tells you if you're making money after advertising costs, not just before. Many sellers focus too much on their pre-advertising numbers, assuming they're in the black when in reality, their ad spend could be wiping out their profit margin.

Handmade sellers, especially those on Amazon, often need to spend on advertising to get visibility. But if you’re not accounting for those costs, your product may not be as profitable as it seems. PAG helps you see the true picture—whether you’re actually bringing in a profit after all expenses are factored in.

3. Don’t Just Focus on ROI

Return on investment (ROI) is a common metric sellers use to evaluate their success, but Tyler warns that focusing only on ROI can be a mistake. A product might show a good ROI on paper, but if you’re not turning that inventory quickly enough, it could be dragging your business down.

Tyler explains:

“A good ROI is more than just profit—it’s about how often you flip that cash back into your business.”

This means that even if a product looks profitable, if it’s not selling fast enough, it could be tying up cash that could be used elsewhere in your business.

For handmade sellers, it’s essential to balance both profitability and inventory turnover to make sure your business is running smoothly. If your money is stuck in slow-moving inventory, it can prevent you from scaling effectively.

4. Track the Right KPIs

Understanding your business’s health requires tracking the right key performance indicators (KPIs). Tyler emphasized that too many sellers are looking at the wrong metrics, or worse, not tracking any at all. Here are a few essential KPIs for handmade sellers to monitor:

• COGS: Know how much each unit costs to produce and sell, including raw materials, packaging, and labor.

• PAG: This is your real profit after advertising costs, showing the true profitability of each product.

• Inventory Turnover: How fast are you selling through your stock? A good inventory turnover rate keeps cash flowing back into your business.

By keeping a close eye on these KPIs, you’ll have a clearer understanding of where your business stands and what you need to improve.

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Final Thoughts: Get Real About Your Numbers

As handmade sellers, it’s easy to get caught up in the creative side of the business, but if you don’t have a clear picture of your finances, you could be in trouble. Tyler Jeffcoat’s insights remind us that tracking the right metrics and understanding unit economics are critical to making informed decisions and running a truly profitable business.

Ask yourself: Are you really making money on each sale, or just assuming you are? Start diving into your numbers today, track your KPIs, and ensure that every unit you sell puts a real smile on your face, not a frowny one.