How the fees are measured

Outline

This is the document that has to be right, because it is the argument for the whole product. The derivation below is correct; the worked examples are still being written.

The short version

The Amazon fee schedule states a referral rate. Sellers model margin from it. Measured against the Finances feed instead, the real cut on a cheap unit lands between 33% and 43% of the sale price rather than the ~17.85% the schedule implies.

The difference is not fraud and not an error. It is made of charges the schedule either states separately or does not mention:

• the per-item closing fee, flat rather than proportional, which dominates on a cheap unit and nearly disappears on an expensive one
• postage bought through Buy Shipping, which arrives as its own transaction hours after the order and belongs to the order rather than to the month
• fee VAT, which a seller who cannot reclaim input VAT pays in full
• fulfilment charges that vary by unit, not by price

Why this changes a price floor

A floor built from a modelled rate is wrong in the direction that costs money. It is too low, so the repricer is willing to sell below break-even and reports a profit while doing it.

Measured, the floor is:

break-even price = (landed cost + flat charges) / (1 - measured rate)

Both terms matter. A rate alone cannot express a flat charge, and a flat charge alone cannot express a rate. Collapsing them into one number is the most common way a seller’s floor ends up below their actual cost.

One trap worth naming

On a deferred-settlement account, a sale is posted twice: once when it happens, and again when Amazon releases the money a week or so later. Both carry the same shipment identifier.

Summing both counts every sale twice. Per-unit figures mostly survive, because the numerator and denominator double together, which is exactly why this kind of bug hides for months. Period totals do not survive at all.

Biryar drops the release twin. If your own totals disagree with Amazon’s by roughly the value of a week of sales, this is the first thing to check.

Still to be written

• The derivation, with a worked example at three price points showing the rate move as the flat charge is amortised over a larger sale.
• The exact fee paths read out of the Finances feed, and the seven an earlier version of the ledger silently dropped.
• How a label covering several SKUs is split across an order, and why pro-rata rather than equal.